2024 CLASS ACTION LAW FORUM SUMMARIES
2024 CLASS ACTION LAW FORUM
USD SCHOOL OF LAW SUMMARY OF PROCEEDINGS
Edited by: Kathryn Bosman Cote and Baylee Swidler Faculty Advisor: Professor Shawn Miller
The 6th Annual Class Action Law Forum was held at USD School of Law from March 12 to March 14, 2024. With hundreds of attendees, the conference featured 16 federal judges and renowned defense and plaintiff’s attorneys in the mass tort and class action space. This three-day forum discussed emerging trends and cutting-edge legal issues, from the impact of artificial intelligence on class actions, to the complexities involved in multi-district litigation, to navigating privacy class actions. The Chief Judges Panel provided valuable insights at the conference, covering various topics including current judge vacancies, case assignments, workload distribution to magistrate judges, the new remote work rule, the early neutral evaluation process, preliminary rules, and artificial intelligence. Additionally, panels such as “Ethics: Growing Impact of Technology and AI,” “Social Media,” and “9th Circuit Appellate Trends” left attendees eager for further discussion and exploration.
Ben Crump, a celebrated civil rights attorney, gave the keynote address on the first day of the conference. Crump has dedicated his career to civil rights, representing families of those who have fallen victim to injustice, including the families of George Floyd, Breonna Taylor, and Trayvon Martin. He underscored the importance of fostering ongoing dialogue and growth within the legal realm, aiming to create a more fair and equitable system for all. On the second day of the conference, Professor Michael Ramsey, a highly recognized constitutional law scholar, along with USD School of Law Dean Robert Shapiro delivered a keynote presentation focused on the current term of the United States Supreme Court. Professor Ramsey and Dean Shapiro analyzed past Supreme Court precedents and debated their influence on upcoming cases, predicting the outcome of pending cases and how each justice may lean.
The Summary of Proceedings is a compilation of the work of fifteen USD School of Law students selected to support panels this year. The selected students include Averi Aburto, Allan Babiner, Joseph Blair, Brandon Bontrager, Anthony Cardon, Macey Carper, Connor Fidone, Roya Hassas, Sophia Jimenez, Alexandra Moynihan, August Pearson, Dina Qubain, Lucas Tekin, Kelly Wacker, and Samantha Webster. Students worked as research assistants for the judges and practitioners in preparing for conference presentations and composing the below summaries detailing each of the panels they supported. Students Kathryn Bosman Cote and Baylee Swidler compiled and edited the summaries into the compilation found below. Professor Shawn Miller served as faculty advisor for the students.
CONSUMER CLASS ACTIONS
March 12, 2024 at 9:15 a.m.
Moderator:
Jonathan Carameros, Kurtzman Carson Consultants LLC
Panelists:
Hon. Jinsook Ohta, U.S. District Court for the Central District of California
Alexandra Preece Barlow, Morrison Foerster
Courtney Baird, Duane Morris
Derek Loeser, Keller Rhorback
Tina Wolfson, Ahdoot Wolfson
Authored by Kelly Wacker
During the opening panel of the 2024 Western Alliance Bank Class Action Forum, the Honorable Jinsook Ohta and panelists Alex Barlow, Courtney Baird, Derek Loeser, and Tina Wolfson discussed current trends in consumer class actions, including recent government activity, developments in mass arbitrations, privacy litigation, and notable developments in class action standing.
I. Government Activity in Consumer Protection Litigation
Judge Ohta covered Federal Trade Commission (FTC) and Department of Justice (DOJ) activity in consumer protection litigation. Each state has its own Unfair, Deceptive, and Abusive Practices (UDAP) statutes. In California, the two key sections are §17200 Unfair Competition and §17500 False Advertising. Judge Ohta explained that law enforcement activity often clusters around a few key themes.
First, law enforcement uses these statutes as tools for addressing garden-variety fraud. Judge Ohta described the rise in false marketing around masks, respirators, and other personal protective equipment during the beginning of the COVID-19 pandemic. The FTC took action against companies making deceptive representations of masks (e.g., promising the masks would arrive the next day). The California Attorney General also took action against these “healthcare providers,” who preyed on fear, vulnerabilities, and weakness in the general population.
This leads into the second theme the vulnerable population space. The California Attorney General brought suit against a for-profit educational institution, Ashford University. This business targeted a vulnerable student group; the Ashford University population was largely low income, older, and made up of minority groups. The University made misrepresentations about financial aid covering the costs of schooling and promised certain career paths without having the right licensing. As a result, students were forced to drop out after their lifetime loans ran out. As much as three quarters of the students were unable to finish their education and were saddled with expensive loans. The students ended up winning a $20 million verdict.
In another case, the FTC filed a complaint in 2018 about Consumer Defense, a mortgage modification scheme that preyed upon homeowners by falsely promising to prevent foreclosure and improve the affordability of mortgages. The defendants deceitfully promised to help struggling homeowners, claiming that their team of legal experts would secure more manageable and affordable mortgage payments. Additionally, the defendants collected illegal upfront fees and unlawfully instructed homeowners to refrain from paying their mortgages or communicating with their lenders. Exploiting the vulnerability of this demographic, the defendants peddled an illusory solution to alleviate their financial hardships.
The third theme prioritizes profits over people. This occurs when corporations decide to make economically expedient business decisions that are harmful to consumers. Attorney Generals of multiple states brought suit against a large pharmaceutical company who produced implantable defibrillators. The company knew that ten out of every hundred devices would not work but decided to sell them anyway. A second example of this type of deceptive marketing involved Meta. This company knew about the addictive and harmful properties of their algorithms, yet concealed that information and continued designing their algorithms to promote addictive behavior. Each of these companies were legally deceptive and abused consumer trust.
Government enforcement works symbiotically with what plaintiff class actions are doing. Frequently, private actions precede governmental intervention. The surge in lawsuits can alert government agencies to potential systemic issues, prompting them to initiate their own investigations or enforcement actions. For defense attorneys, it is crucial to remain vigilant about evolving government regulations. Legal teams can proactively adopt strategies to mitigate legal risks and ensure compliance with applicable laws.
II. Recent Developments in Mass Arbitration
Tina Wolfson spoke about recent developments in mass arbitration from a plaintiff perspective. The Supreme Court gave companies the ability to have individual arbitrations, whereby consumers agree to non-negotiable terms and conditions (i.e., a contract of adhesion). In response, plaintiffs began filing mass arbitrations. The defense bar has argued that mass arbitration is unmanageable, especially due to expensive filing fees.
Wolfson discussed four strategies she has observed defense using in response to mass arbitrations. The first is simply giving up. Amazon completely did away with mass arbitration provisions, and are now back in court dealing with class actions. The second strategy is refusing to pay. For example, 36,000 individual claims were brought against Samsung, bringing the total initial fees to $4 million. Samsung argued that the court lacked administrative authority, but so far their arguments have failed and they were ordered to pay. 1 The third strategy is to use Bellwether provisions in arbitration clauses. As of now, it is unclear whether these will be upheld. One judge has held these provisions unconscionable because some plaintiffs would have to wait up to tens of years for their claims to be heard. The fourth strategy is to use process arbitrators.
1 This issue is currently pending on appeal.
Courtney Baird explained that from the defense perspective, attorneys are looking at whether the consumer assented to the terms of the arbitration provision. This is a factual question causing courts to adopt differing approaches.
III. Trends in Privacy Litigation
Derek Loeser opened by explaining that there has been a noticeable increase in privacy litigation, likely due to the increasing scale and scope of big tech. Judge Ohta also confirmed that, among issues being litigated, the number of privacy claims is very prominent. Courts are coming to understand the risks posed by big tech, so cases are surviving motions to dismiss more often. The defense would argue that these are victimless crimes companies have used consumer information, but what’s the harm?
Loeser reflected on three ways to build a case around intangible injuries from privacy violations. First, statutory damages can be utilized. Second, attorneys can proceed on a state law negligence or breach of contract claims and seek nominal damages. Even though $1 does not seem like a lot, $1 for over 300 million people is a substantial award. Third, the court can impose equitable relief under the theory that the company was unjustly enriched. For example, Facebook makes billions of dollars per year by using consumers’ personal information. To succeed under unjust enrichment, the profits must be tied to misconduct. Loeser advised practitioners to hire a good economist.
On the topic of discovery, Loeser explained that the defense is often trying to keep information out of discovery. Privilege logs may be used to withhold documents, so Loeser noted that attorneys must really dig into the logs, even if it is time consuming. Sometimes settlement comes when discovery is about to be cracked open. The defense may further encourage settlement due to the sheer number of privacy claims filed. With hundreds of individual privacy claims, sometimes the statutory damages are less than the filing fees, making settlement the wisest financial decision.
IV. Notable Developments in Class Action Standing
Alex Barlow discussed notable developments in standing for named plaintiffs. In the TransUnion case, the court held that plaintiffs must show an injury in fact for each form of relief sought meaning you need to have standing to seek both damages and injunctive relief. The 11th Circuit held that the district court did not have authority to sua sponte vacate injunctive relief, because there must be standing to seek those kinds of relief. Additionally, there must be standing at every step of the lawsuit, including the class certification stage, so Barlow recommends counsel vets their plaintiffs carefully.
WHAT TO EXPECT IN AI LITIGATION IN 2024
March 12, 2024 at 10:15 a.m.
Moderator:
Thomas Smith, University of San Diego School of Law
Panelists:
Hon. Wesley Hsu, U.S. District Court for the Central District of California
Erin Bosman, Morrison Foerster
Ryan Clarkson, Clarkson Law Firm
Jennifer Riley, Duane Morris
Authored by Brandon Bontrager
The integration of artificial intelligence (AI) in the legal landscape heralds a new era marked by unprecedented opportunities and challenges. In this panel, distinguished legal professionals and scholars convened to explore the multifaceted impact of AI on litigation. Moderated by Tom Smith, a professor at USD, whose extensive experience spans the intersection of law and technology, the discussion delved into the evolving roles of judges and lawyers, regulatory considerations, privacy rights, and emerging trends in AI-related class actions. On the panel was Judge Wesley Hsu, who previously served as an assistant U.S. attorney prosecuting cyber and intellectual property crimes; Erin Bosman; Ryan Clarkson; and Jennifer Riley.
Judge Hsu initiated the conversation by reflecting on the evolving role of judges and lawyers in the age of AI. He emphasized the importance of considering the philosophical underpinnings of the judiciary's function, particularly in light of AI's growing influence. While the legal landscape has mechanisms to address foreseeable issues, such as fabricated cases in briefs, Judge Hsu highlighted the deeper implications of AI on judicial decision-making. Drawing parallels to criminal sentencing, he underscored the nuanced interplay between legal precedent and human judgment, challenging the notion of AI as a mere tool for predictability. Citing France's prohibition on using AI to predict judicial rulings, Judge Hsu raised fundamental questions about the ethical and practical implications of AI-driven decision-making in the legal sphere.
Expanding on these themes, Judge Hsu referenced a presentation by a Stanford law professor that provided insights into real-world applications of AI in legal practice. The example of Walmart's use of AI to assess settlement values in slip-and-fall cases illuminated the transformative potential of AI in streamlining legal processes and enhancing decision-making. However, it also underscored ethical dilemmas regarding the delegation of legal tasks to AI systems and the potential erosion of human judgment. These discussions highlighted the urgent need for legal professionals to grapple with the ethical and practical implications of AI's integration into legal proceedings.
Erin Bosman brought a regulatory perspective to the discussion, emphasizing the need for clarity and coherence in navigating legal uncertainties surrounding AI. In industries such as pharmaceuticals and medical devices, where AI is increasingly employed, the regulatory framework often lags behind technological advancements. Bosman underscored the challenges of ensuring regulatory compliance while fostering innovation and cautioned against overlooking potential risks in the rush to adopt AI solutions. The FDA's stance on clinical trials in China underscored the complexities of applying AI in contexts where demographic disparities raise concerns about data extrapolation and generalization.
Ryan Clarkson shifted the focus to privacy rights in the era of AI, raising concerns about the unchecked proliferation of AI-driven technologies and their implications for personal privacy and autonomy. Highlighting instances of data exploitation by tech giants, Clarkson underscored the urgent need for robust legal protections to safeguard individuals' rights in the face of AI-enabled surveillance and manipulation. The emergence of deep fake technologies and their potential to weaponize misinformation underscored the imperative for legal frameworks to keep pace with technological innovations and mitigate their adverse societal impacts.
Clarkson also brought attention to several types of lawsuits already in progress. First are lawsuits against tech giants for mass theft of data. Second are suits against health insurance companies for their use of AI to deny coverage and override physician
recommendations. Third are suits against dating app companies who have designed their apps to addict their users. Clarkson points out a building trend towards a largescale data revolt against tech companies and the continued efforts of the tech companies to keep the “black box” of how the AI models work secret.
Jennifer Riley provided a comprehensive overview of trends in AI-related class actions, shedding light on the burgeoning legal landscape shaped by AI-generated data and algorithms. From employment discrimination to privacy breaches, AI's pervasive influence has spawned a wave of class action lawsuits seeking redress for various harms inflicted by AI-driven decision-making. Riley underscored the challenges of holding AI developers and users accountable for algorithmic biases and data privacy violations, emphasizing the need for nuanced legal frameworks to address the complexities of AIrelated litigation.
Further exploration into each panelist's insights revealed deeper layers of analysis and understanding. For instance, Judge Hsu reflected on the philosophical underpinnings of judicial decision-making in the AI era prompting a closer examination of the ethical considerations inherent in AI-driven legal processes. Likewise, Bosman's regulatory perspective underscored the need for adaptive regulatory frameworks capable of addressing the rapid pace of technological innovation while safeguarding public interests. Clarkson's exploration of privacy rights in the context of AI-driven surveillance highlighted the need for robust legal protections to preserve individual autonomy and dignity in an increasingly data-driven society.
Moreover, the panel discussion raised additional topics for consideration, such as the ethical implications of AI-driven decision-making, the evolving role of AI in legal research and discovery, the challenges of regulating AI algorithms, and the potential impact of AI on access to justice.
In conclusion, the panel discussion underscored the need for a nuanced and forward-thinking approach to navigating AI in litigation. While AI holds immense potential to enhance efficiency and decision-making in legal practice, its deployment
must be accompanied by robust ethical guidelines and regulatory safeguards. Balancing innovation with accountability, the panelists stressed the imperative for legal practitioners and policymakers to grapple with the complexities of AI's impact on the legal profession and society at large. As AI continues to permeate every facet of legal practice, forums like this panel serve as crucial platforms for fostering dialogue and shaping the trajectory of AI in litigation in the future.
QUICK HIT: ANTITRUST
March 12, 2024 at 11:30 a.m.
Moderator: Michael O’Connor, Western Alliance Bank
Panelists:
Bonnie Lau, Morrison Foerster
Catherine Smith, Gustafson Gleuk
Authored by Connor Fidone and Dina Qubain
Moderator Michael O’Connor and practitioners Bonnie Lau and Catherine Smith gathered during this quick update on antitrust to explore two main topics: uninjured class members, which included discussions about recent developments in predominance, including Olean; and no-poach antitrust cases, including McDonald’s.
In the first portion of the panel regarding uninjured class members, Lau began by discussing the threshold where certification should not be granted — classes with no more than 10% of uninjured plaintiffs. The panelists then discussed several major cases.
The first case, In re Lamictal Direct Purchaser Antitrust Litig., 957 F.3d 184 (3d Cir. 2020), involved vacated class certification because the district court failed to resolve conflicting expert opinions about whether “up to one-third of the entire class” was uninjured, “even though [that issue] touches on the merits.”
The second case, In re Asacol Antitrust Litigation, 907 F.3d 42 (1st Cir. 2018), held that the proposed class — 10% of which had not suffered any injury — did not satisfy Rule 23(b)(3) predominance. The rule states that, “(3) the court finds that the questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.”
The third case presented was In re Rail Freight Fuel Surcharge Antitrust Litig., 725 F.3d 244, 252 (D.C. Cir. 2013), where the court held that a proposed class with 12% uninjured class members failed to satisfy Rule 23(b)(3) predominance.
The final case presented was Olean Wholesale Grocery Operative, Inc. v. Bumble Bee Foods LLC, 993 F.3d 774 (9th Cir. 2021). The Ninth Circuit panel decision in this case was reversed, and the en banc decision provided some important clarification in this area of the law. The reversed panel decision ruled that statistical evidence may be sufficient to demonstrate predominance and class-wide injury, but district courts must analyze the evidence “rigorously” to ensure its reliability. In addition, the panel decision stated that a proposed class with more than a de minimis number of uninjured class members could not satisfy the predominance requirement. However, the panel did not specifically define this number it suggested 5-6% of uninjured class members is the outer bounds. On reversal, the decision stated that the preponderance of the evidence standard should be used to evaluate whether plaintiffs have established the prerequisites of Federal Rule of Civil Procedure 23. In addition, the court stated that plaintiffs’ expert analysis need only be capable of showing antitrust injury on a classwide basis at the class certification stage. Importantly, the court rejected the argument that Rule 23 does not permit class certification of a class potentially including more than a de minimis number of uninjured class members. Instead, Rule 23(b)(3) requires an inquiry only into whether common questions predominate over individual ones. From Smith’s point of view, this is a step in the right direction if illegal activity impacted a large number of people, there needs to be compensation. The dissent noted that punting these key questions of uninjured class members until later is essentially a victory for plaintiffs because the cases will likely settle. This results in the defense being put in a challenging position of having to settle with members who have not been injured. After describing the recent changes in law, the panelists discussed their personal thoughts on these cases. Both panelists believe that this issue is heading to the Supreme Court soon. They both agree that it is a complicated issue that will have significant
impacts depending on how the Supreme Court rules. A conservative Supreme Court could be detrimental to plaintiffs. In addition, there is an issue and complexity with being able to define damages they are not as straightforward as people think because underlying issues are difficult to define.
The second main topic discussed was no-poach antitrust cases. There were major shifts in 2016 regarding anti-poach agreements the DOJ and FTC announced that the DOJ will criminally prosecute stand-alone agreements between employers either to not solicit employees or for setting/fixing wages or any element of wages/benefits. Because of this change, a robust body of no-poach cases have developed. The following table provides some of those cases:
Case
Charged Conduct Result
U.S. v. Jindal (E.D. Tex., Dec. 2020) Wage-Fixing Acquitted by jury
U.S. v. SCA (N.D. Tex., Jan. 2021)
U.S. v. Hee (D. Nev., March 2021)
No-Poach
Dismissed by DOJ
No-poach, wagefixing Deferred prosecution agreement
U.S. v. DaVita (D. Colo., July 2021) No-poach
U.S. v. Patel (D. Conn., Dec. 2021) No-poach
Acquitted by jury
Motion for acquittal granted
U.S. v. Manahe (D. Me., Jan. 2022) Wage-fixing, nohire Acquitted by jury
TRENDS AND HOT TOPICS IN CLASS ACTIONS
March 12, 2024 at 1:15 p.m.
Moderator: Stephanie Amin-Giwner, Epiq
Panelists:
Hon. Jacqueline S. Corley, U.S. District for the Northern District of California
Tim Blood, Blood Hurst & O’Reardon
Arthur Bryant, Bailey Glasser
Whitney O’Byrne, Morrison Foerster
Anne McLean, Sheppard Mullin
Authored by Macey Carper
Class action litigation stands at the forefront of legal discourse, shaping the landscape of consumer protection and corporate accountability. This Trends and Hot Topics in Class Actions panel was moderated by Stephanie Amin-Giwner and included as panelists The Honorable Jacqueline S. Corley and prominent legal experts, Tim Blood, Arthur Bryant, Whitney O’Byrne, and Anne McLean. The panel delved into pivotal current topics within class action law.
Bryant began the panel by dissecting the concept of ascertainability, highlighting the evolving standards within the legal framework and emphasizing the need for clarity in identifying class members. In the world of class actions, class members must be easily ascertainable using objective criteria. For nearly 57 years, Daar v. Yellow Cab Co., 67 Cal. 2d 695, 433 P.2d 732 (1967) laid out a clear meaning behind ascertainability, “[i]f the existence of an ascertainable class has been shown, there is no need to identify its individual members in order to bind all members by the judgment.” However, in 2021, the Third Circuit introduced a heightened two-part standard. Plaintiffs must show that it is administratively feasible to identify the class members and self-identifying affidavits that confirm involvement are no longer enough to tie the person to the class. The heightened requirement poses many new challenges, including how Rule 23 makes no mention of ascertainability, the new requirement being contrary to every decision
made in similarly situated cases for the past half-century, the deviation from the Supreme Court’s holding in Shady Grove Orthopedic Assocs., P.A. v. Allstate Ins. Co., 559 U.S. 393, 130 S. Ct. 1431, 176 L. Ed. 2d 311 (2010), and the new requirement’s denied certification in all consumer cases where receipts weren’t provided.
The latter point is of particular interest because the Supreme Court considers those cases to be at the very core of the class action mechanism. Class Actions exist to protect many small consumers experiencing small damages over a grand scale. Ascertainability should be one key factor, among others, to consider when determining whether a class action is unmanageable. As a result of the following, California rejected the Third Circuit’s reasoning, with many other courts following suit. The heightened standard, however, has yet to be fully squashed. The Third Circuit just released a new case aggressively defending their new heightened standard requirement.
McLean followed, shedding light on Article III injury and standing, citing recent Supreme Court rulings and circuit court interpretations. This legal issue has been actively developing in the Ninth Circuit Court along with two Supreme Court issues that rule on the matter. The two Supreme Court cases are Spokeo, Inc. v. Robins, 578 U.S. 330 (2016) and TransUnion LLC v. Ramirez, 594 U.S. 413 (2021). Differences between the Article III standing requirements and Rule 23 standing requirements presents problems. What happens when the harm is intangible? When monetary relief is unavailable, injunctive relief may be available under Article III. At this point in the panel, multiple panelists jumped in to emphasize the importance of checking standing. The combined panelists noted that not only are judges always checking standing, but it is also a useful tool to have in your back pocket. The panelists ended their group discussion by concluding that regardless of what court your case ends up in due to standing, there will be benefits and obstacles. Additionally, practitioners should always remember that they do not need standing to ask for injunctive relief in such cases. The defendant can always voluntarily include injunctive relief as part of the settlement offer that can assist the entire class.
McLean continued her individual discussion by summarizing a Third Circuit case, Barcliff, which summarized the law on standing. In the case, the plaintiff was embarrassed that her private credit card information was shared without permission. The court held that embarrassment was not enough to establish Article III standing. In Olean Wholesale, the court reversed the de minimis threshold of uninjured class members in an antitrust context. At the class certification stage, parties need only to determine whether the common question predominates over any individual questions, including questions about injury or entitlement to damages.
Amin-Giwner then asked Judge Corley what judges may be looking for in class action notices. Judge Corley believes times have changed in regard to notice. In the past, little thought was given to notice, judges “just sign[ed] off on every class settlement without looking at it.” Now, however, Judge Corley went as far as to say that on average she rejects three-quarters of all initial class notices submitted. Judges across the board are putting significant time and effort into analyzing these notices. Understanding why judges deny a notice is crucial so attorneys do not waste time and effort into a notice only for it to be denied. So, what is the secret to creating a notice that judges will sign off on every time? Judge Corley said format is key. Factors like length, font size, margins, and excessive use of legalese are all pertinent. Judges are looking for notices that are clear, easy on the eyes, and most importantly... understandable. If attorneys aren’t sure what this looks like, Judge Corley suggested looking at the last class action notice the judge approved for inspiration. Judge Corley also encouraged attorneys to get creative. Don’t shy away from simple and intuitive messaging, like simple flow charts and graphs. Focus on what conveys the message the most effectively. Social scientists have dedicated time to researching what an optimal class action notice would look like. One website, noticeproject.org, provides free templates for class action notices. Judge Corley recommended using this website for a starting point or for inspiration. Judge Corley concluded the discussion by emphasizing the importance of proper notice. Both
plaintiffs and defendants should want the class to understand the language in the notice.
Bryant then expanded upon Rule 23 notice and claims maximization notice. He explained that notice providers believe Rule 23 fails to produce claims as it should, simply because it is too complicated. There are methods, however, which can maximize claims that do not fall under Rule 23 requirements. For example, small ads on the internet, TV, word bubbles, and other short quips are very effective at notifying class members. Even though Rule 23 will require an additional notice, using other effective means of notifying class members can maximize claims. Claim maximization is particularly important because it can help avoid the issue of professional objectors. Additionally, judges love claim maximization. McLean brought up an emerging issue of fraudulent claims coming from AI. The panel noted that while the fraud is concerning, it is encouraging that the fraud is being detected. While AI can lead to fraudulent claims, AI also has the potential to stop fraudulent claims.
Blood then opened the next topic of mass arbitration. Blood believes the true purpose of arbitration clauses is to protect guilty corporations from responsibility. Mass arbitration was developed to give harmed parties a chance to hold the guilty corporations responsible. The window for mass arbitration appears to be closing as large corporations alter contractual terms. Allegations against the American Arbitration Association even allege that the AAA changed their rules to help defendants make sure arbitration clauses prevent any sort of adjudication of corporate fraud. Blood presented a better way to go about mass arbitration allowing the threat of mass arbitration to simply loom over the corporation. If too many arbitration claims arise, the company could shut down and not deal with the issue at all. Threating arbitration rather than filing all of the claims could be critical leverage to encourage a large corporate settlement.
Next, O’Byrne discussed waivers. In Morgan v Sundance, the Supreme Court eliminated the prejudice requirement when an arbitration agreement is opposed. The
prejudice requirement necessitates a showing of prejudice by the opposing party's continuance to engage in the judicial system when they had a right to arbitration. The Supreme Court now treats arbitration as any other contract. To prove waiver, it must be shown that (1) the plaintiff has knowledge of an existing arbitration agreement, and (2) the defendants engaged in some intentional acts inconsistent with the right. But what happens when some plaintiffs, who are part of a class action, do not agree to an arbitration agreement and some of the plaintiffs do agree? The Ninth Circuit case Hill v Xerox, involved a plaintiff who was part of a certified class. While the plaintiff did not sign the arbitration agreement, Xerox, the corporation, showed that many of the class members had signed the agreement. The Ninth Circuit held that Xerox waived their right to enforce the arbitration agreement. Taking class discovery and allowing the class to be certified were found to be inconsistent with the right to compel arbitration.
O’Byrne was joined by the other panelists to discuss other problems surrounding motions to compel. First, parties can litigate for a long period and then bring a motion to compel arbitration at the last minute and extend the case even further. Judge Corley and O’Byrne discussed the benefits of case management and the practical choice, by either the judge or the parties, to impose an actual deadline on when to file to compel arbitration. The topic concluded with Blood highlighting some key facts to remember about arbitration. In state court motions to compel arbitration, a denial is automatically appealable and can be automatically stayed. However, a newly signed Civil Procedure Bill Section 1294 does not make the stay automatic. Blood noted that in federal court, it is the exact opposite. There is an immediate right to appeal and automatic stay for all matters involved in the appeal.
Amin-Giwner finally handed the discussion back over to Bryant to discuss Title XI case trends. Bryant was the lead trial counsel for the very first Title XI case in the country and has worked on more Title XI cases than any other person in the country. Bryant raised an issue many are not aware of. Although Title XI has been the law for over 50 years, the federal government has never filed a Title XI suit themselves. Instead,
every case has been led by student-athletes, primarily women, experiencing discriminatory treatment. Bryant believes that around 80% of the schools he visits for a case settle without a lawsuit and comply with Title XI.
KEY TAKEAWAYS FROM 2023
March 12, 2024 at 2:15 p.m.
Moderator:
Linda Lane, University of San Diego School of Law Panelists:
Hon. Edward Chen, U.S. District Court for the Northern District of California
Hon. Dana Sabraw, U.S. District Court for the Southern District of California
Aelish Baig, Robbins Geller Rudman & Dowd
Daralyn Durie, Morrison Foerster
Kiley Grombacher, Bradley Grombacher
Authored by Sophia Jimenez
On the first day of the Class Action Forum, distinguished members of the bench including the Honorable Edward Chen and the Honorable Dana Sabraw, along with USD School of Law Professor Linda Lane, and skilled class action litigators Aelish Baig, Daralyn Durie, and Kiley Grombacher, discussed key takeaways from 2023 class action litigation. The panelists discussed five key points: (1) consideration of trial issues at the class certification stage; (2) the importance of bellwether trials; (3) the use of video testimony at trial; (4) developments in demonstrative evidence; and (5) the effective use of pre-trial focus groups.
Trial Issues at the Class Certification Stage
Judge Sabraw began by discussing the significance of Olean v. Bumblebee, in which the Ninth Circuit explained when assessing whether a common question exists, a court must determine whether the evidence shows that the question is capable of classwide resolution and not whether the evidence establishes that plaintiffs would prevail on that question at trial. This ruling greatly impacted the class action space because it established that not every putative class member must show they have Article III standing. Rather, it is important to look at class certification and whether the evidence presented, if admissible, passes a Daubert standard and if credited by the jury, could result in a class-wide finding of injury or impact. If the jury elects not to credit plaintiffs’
testimony and instead credits the defense testimony, there will be class-wide resolution because the plaintiff will have not met the standard for a class-wide basis injury.
Judge Chen offered insights into class action trials, stating that from the bench’s perspective, the exact nature of a trial remains uncertain until it begins. Accordingly, early review of jury instructions and verdict forms to understand how the commonality and predominance factors will play out can illuminate how the case will be tried. For example, if it is known in advance that the jury will be confronted with a complex form in a challenging case, the judge may try the case differently, such as having experts available for a particular subject.
Although it has become easier to certify a class in the Ninth Circuit, Judge Chen explained it is only when the evidence comes in that the parties can see the case “in color” rather than “in black and white.” At that point, individualized considerations of whether the underlying claims can be decertified may then be considered.
Importance of Bellwether Trials
In the context of mass actions and class actions, it may be more efficient to try cases one at a time or in quick succession rather than cumulatively because doing so gives the parties methods to evaluate the strengths and the weaknesses of their case and estimate settlement values. For example, Judge Chen explained an issue of manageability often arises in nationwide class actions which involve different states with distinct laws. A potential solution is selecting three representative states instead of going through thirty different jurisdictional laws to determine the particular elements of each action. From the bench’s point of view, it is more straight forward for parties to pick a limited number of documents most representative of each side rather than having the court sift through thousands of documents.
Use of Video Testimony at Trial
Class action litigators often do not prepare cases assuming they are going to trial since most settle. Thus, parties often take a minimalist approach to discovery which may leave them unprepared in the event the case does reach the trial stage. The panel
discussed that a lack of preparation for trial often results in a missed opportunity for video depositions. Accordingly, litigators should prepare discovery anticipating the case will go to trial by videotaping depositions, particularly of the parties, with the elements they would need to prove to a jury in mind. By doing so, depositions are no longer just another form of discovery; they can be used as key evidence at trial. Video depositions can impact opening statements and closing arguments, and can even be used to impeach a witness. The panel recalled an example of a strategic use of a video deposition in which a key corporate officer was deposed by video, which displayed the officer clearly bothered by and dismissive of the plaintiff’s claims. Plaintiff’s counsel used snippets of this video throughout the trial and in closing arguments to leave the jury with an unfavorable impression of the officer.
Video depositions can also be helpful when a star trial witness is unavailable. In such a case, it may be helpful to preserve the witness’s favorable disposition during testimony, rather than having adverse questioning be the only frame through which the jury perceives that particular witness. While there are downsides to showing video testimony, such as showing too long of a snippet during trial, it can be a highly effective tool if used properly. Jurors seem to connect more to the live nature of video testimony than written testimony given their different dynamics.
Developments in Demonstrative Evidence
Demonstrative evidence can be critical in class action trials, assuming it is used correctly. If used ineffectively, however, jurors may become confused with too many numbers or technical details. Instead, litigators should consider the heart of the case: what needs to be communicated to the judge and the jury via the use of demonstrative evidence. If a demonstrative is used effectively, it can achieve two important goals at trial. First, it can bring the narrative to life. Specifically, demonstrative evidence can take complex concepts and crystallize them or take abstract concepts and make them concrete. Second, it engages the jury.
Even though the primary goal of demonstrative evidence is to create a visual impact, accuracy remains paramount. The panelists recommended including a citation on each slide or graphic to direct the court to the precise location in the trial record for reference. Another practical tip the panel suggested was to include less words on slides to create an emotional punch. Instead of overcrowding slides with narrative text, a litigator should strive to create a visual that will stay with the jury.
Effective Use of Pre-Trial Focus Groups
One of the most effective methods for a litigator to understand their case is by grasping how others conceptualize their ideas and arguments. Thus, l awyers often use focus groups to gauge whether certain groups of people are “for” or “against” their case. But focus groups also serve broader purposes. Specifically, focus groups can be used to see if case themes are translating, if a case theme works for the argument, or if certain legal or technical concepts are being explained in a way the jury will comprehend. While focus groups can be costly, they do not need to be. For instance, Durie recalled how she procured one of her most successful focus groups through a Craigslist advertisement. This group sat in a conference room and developed arguments they found persuasive. Durie then conducted mock trials with the group, losing four out of five of them. However, armed with the insights gained through working with this focus group, when it came to the real trial, she won.
CHIEF JUDGES PANEL
March 12, 2024 at 3:30 p.m.
Moderator: David Casey, Jr., Casey Gerry
Panelists:
Hon. Phillip Gutierrez, U.S. District Court for the Central District of California
Hon. Troy Nunley, U.S. District Court for the Eastern District of California
Hon. Dana Sabraw, U.S. District Court for the Southern District of California
Hon. Richard Seeborg, U.S. District Court for the Northern District of California
Authored by Averi Aburto
On day one of the Class Action Law Forum, David Casey moderated an esteemed panel of Chief Judges from the four federal districts of California: the Honorable Phillip Gutierrez, the Honorable Troy Nunley, the Honorable Dana Sabraw, and the Honorable Richard Seeborg. The judges discussed a wide variety of current trends and issues affecting federal courts.
The panel began by reviewing current court trends, including increases in class action trials, current vacancies, court capacity, and the evolving role of magistrate judges. Regarding the recent increase in class action trials throughout California, Chief Judge Seeborg stressed the importance of getting ahead of state law issues early to prevent delays or confusion later in a case. Chief Judge Seeborg also emphasized the role of jury instructions and suggested parties build timelines for the jury to better facilitate their understanding of the facts.
The conversation then turned to vacancies, court capacity, and multidistrict litigation (“MDL”). Chief Judge Nunley noted while the Eastern District of California reduced caseloads over recent years, it is incumbent upon attorneys to lobby for more judicial assignments. For instance, Chief Judge Nunley noted the Eastern District does not handle many MDLs. Moreover, Chief Judge Gutierrez shared the Central District of California has been working to fill judgeships and presently has only one vacancy. He also noted the Central District has five MDLs currently pending, including an NFL
antitrust case. With respect to the Northern District of California, Chief Judge Seeborg shared there are a few vacancies pending. He also noted 644 class actions have been filed in the Northern District since March 2023, not including MDLs. The Northern District has seventeen MDLs currently pending, which is the most for any district court in the country. Finally, Chief Judge Sabraw shared that the Southern District of California has two nominees pending and while it generally handles more criminal than civil cases, there are two MDLs currently pending.
The panelists additionally discussed each district’s case assignment process and the increasing role of magistrate judges. Chief Judge Seeborg explained that the Northern District uses a random assignment system which includes magistrates for civil cases. Chief Judge Seeborg believes allowing more magistrates on the bench has led to magistrates having similar caseloads as Article III judges. The Southern District also uses a random assignment system, but Chief Judge Sabraw noted magistrates are primarily used for discovery disputes and case conferences. Chief Judge Gutierrez shared a similar random assignment system is employed in the Central District, but he is considering an opt-out rather than a consent method to increase magistrate participation. Chief Judge Nunley similarly emphasized a desire to increase magistrate participation. He argued magistrates have similar experience and knowledge as other judges, and parties’ consent to a magistrate presiding over their trial often allows cases to be heard sooner.
Next, the panelists discussed the future of remote proceedings in a post-COVID landscape. Recently, the Ninth Circuit Judicial Council unanimously decided to allow each district to formulate their own local rules regarding remote proceedings. Chief Judge Seeborg explained in the Northern District, judges have the autonomy to create their own rules, except for jury trials which must be held in-person. Chief Judge Sabraw noted many judges in the Southern District are averse to use zoom for jury trials. However, zoom platforms may still be utilized and audio access is encouraged for public access in any proceeding. Chief Judge Nunley mentioned in the Eastern District, the
remote policy is flexible, allowing each judge to adopt the approach that suits them best.
Lastly, Chief Judge Gutierrez emphasized in the Central District, each judge has discretion regarding remote proceedings. He suggested that while remote proceedings are more convenient, virtual hearings can strain the connection between parties that develops through in-person interactions in the courtroom.
The panel then proceeded with a discussion on the varying approaches to Early Neutral Evaluations (“ENEs”) in each district. Chief Judge Sabraw noted the success of ENEs in the Southern District, where parties are required to attend an ENE within 45 days of filing an answer. Approximately 20% of filings are settled within 20 days of the ENE, and 42% of all cases are settled within 90 days of the ENE. Chief Judge Sabraw also noted while not all cases have an ENE, most civil litigation does. Chief Judge Nunley shared a similar ENE program exists in the Eastern District, but that it is voluntary. Conversely, Chief Judge Seeborg commented that ENEs are almost never used in the Northern District due to the lack of an automatic requirement for alternative dispute resolution at filing. Similarly, the Central District does not require ENEs, and Chief Judge Gutierrez shared his belief they would receive criticism on magistrate utilization if such a system was adopted.
Next, the panelists offered their perspectives on the value of selecting diverse leadership for MDLs. Chief Judge Seeborg argued leadership should be composed of both younger and more experienced attorneys. He emphasized the importance of choosing experienced leaders who can deliver for the class, but also including younger attorneys so that they can build experience. Chief Judge Nunley echoed this sentiment, emphasizing the value of input from defense counsel. Chief Judge Gutierrez shared his view that choosing leadership as akin to building a law firm. He explained he asks both sides about reputations and prioritizes choosing attorneys who can get along with everyone. He also stressed the importance of developing a leadership team who can relate to the class as well as handle the financing required for MDL cases.
The panel then discussed the recent amendment to preliminary approval under Rule 23 and its implications. Chief Judge Seeborg asked attorneys to review the guidelines before seeking preliminary approval and provide the necessary information as soon as possible. Chief Judge Seeborg shared his beliefs that the success of the new guidelines is partly due to their specificity and that the system could be very successful in other districts. Chief Judges Sabraw and Nunley agreed the amendment was a helpful step, but stated neither of their districts currently have guidelines in place. Chief Judge Gutierrez remarked that while the amendment has not altered the types of preliminary approvals received in the Central District, it could be helpful for creating new rules in the future.
Lastly, the panelists discussed the growing role of AI and the potential development of local rules governing AI usage. Chief Judge Seeborg shared AI is being used to get around standard security measures, such as CAPTCHA, which can lead to false claims. He admitted he personally does not care if an attorney uses AI to write a brief but believes quality control measures and proofreading are necessary. Chief Judge Sabraw indicated the Southern District is waiting to see how AI develops before creating local rules around its usage, but he agreed with Chief Judge Seeborg he would be comfortable with an AI-written brief if it was reviewed by an attorney before filing. The panel concluded with Chief Judgea Seeborg and Sabraw emphasizing the importance of retaining some form of “human-element” in AI-written court documents.
PRIVACY CLASS ACTIONS
March 12, 2024 at 4:30 p.m.
Moderator:
Steven Weisbrot, Angeion Group
Panelists:
Hon. Yvonne Gonzalez Rogers, U.S. District Court for the Northern District of California
Maureen Brady, McShane & Brady
Stuart Davidson, Robbins Geller Rudman & Dowd
J. Colin Knisely, Duane Morris
Purvi Patel, Morrison Foerster
Authored by August Pearson
On the second day of the Class Action Law forum, the Honorable Yvonne Gonzalez Rogers and esteemed practitioners Steven Weisbrot, Maureen Brady, Stuart Davidson, J. Colin Knisely, and Purvi Patel discussed recent developments in privacy class actions. Their discussion centered around the latest trends in privacy class actions, including alternative management structures, emerging theories of liability, and alternatives to class settlements.
The conversation began with a focus on pixel cases, which have become increasingly significant in the realm of privacy law. These cases involve the use of tracking pixels that collect data from users without their explicit consent, often leading to significant privacy breaches. The discussion focused on pixel cases within the healthcare sector, particularly under Health Insurance Portability and Accountability Act (“HIPAA”) regulations. Brady discussed the complexity and significance of pixel cases within the healthcare sector from the plaintiff’s perspective where HIPAA regulations play a crucial role. She elaborated on a case involving a mental healthcare provider who, without proper authorization, used a Facebook pixel to market to over 12 million people during COVID-19, violating HIPAA guidelines and resulting in a severe breach of privacy. This case highlights a critical violation of privacy by the healthcare provider who failed to secure required patient consent, thus breaching HIPPA guidelines.
The panel also discussed the intricacies of legal frameworks governing data privacy, emphasizing HIPPA’s stringent requirements in the healthcare sector. Their discussion detailed how non-compliance with HIPAA's privacy regulations could lead to substantial legal actions against entities who fail to protect patient information. The panelists further discussed implications of unauthorized data use and the sensitivity of health-related information, which they asserted commands a higher duty of care regarding consumer data protection. For instance, Brady noted the “manner of the disclosure is not necessarily as telling as the disclosure itself.” The discussion then proceeded to cover strategies employed in defending privacy breach cases, focusing on establishing negligence due to non-compliance with HIPPA. Brady elaborated on the nuance of constructing a legal argument centering on breach of fiduciary duty and confidentiality of medical records.
Patel shared her experience from the defense perspective, explaining how her practice sees various causes of action under California’s wiretapping statute. She shared the theory behind advancing these cases is by using a third-party pixel provider like Facebook, a website operator can enable a third party to wiretap the communications that website visitor has to the website. Patel noted from the defense standpoint, platforms like Facebook are service providers and “effectively stand[] in the shoes of the website operator, so they cannot be third-party eavesdroppers.” She continued by asserting these platforms are only providing the service they have been retained to provide and are not using the data for their own purposes. Additionally, the panelists shared insights on how pixel cases are typically settled rather than tried, reflecting the substantial value and sensitivity of the information involved. Their discussion also covered the legal strategies employed in these cases, including arguments around breach of fiduciary duty and negligence due to non-compliance with established guidelines.
The panel then shifted its discussion to algorithmic discrimination cases.
Davidson shared a case involving Rite Aid using an AI database to identify known shoplifters. He explained people would go to Rite Aid and the store would run faces through the AI software, alerting employees and leading them to trail the suspicious customer more closely. In some cases, the employees interacted with the suspected shoplifter telling them to leave the store, and sometimes would go so far as to call police. Problems arose, however, when it was discovered the AI system was not always correct. This led to the profiling of customers as well as false accusations of shoplifting.
Davidson stressed the importance of transparency and accountability from defendants in these types of cases and in privacy cases generally.
The panel continued in discussing future trends, emphasizing growing concerns around algorithmic discrimination and the pervasive use of AI in data collection and processing. They also speculated on the evolving legal landscape, noting the lack of transparency in how data is collected and used by corporations. This plaintiff’s perspective highlights the necessity of more stringent legal frameworks to address new challenges posed by technological advancement.
Judge Rogers highlighted the importance of class action attorneys determining what their “five strongest claims” are in MDL cases. Judge Rogers discussed large class action cases with numerous causes of action and stated attorneys should know what their strongest claims are and allow defendants to attack those. Judge Rogers reasoned if a plaintiff’s five strongest claims do not survive, the rest of the case likely will not either. Judge Rogers also stressed judges cannot forget to “close the loop” on remaining causes of action, because plaintiffs can come back years later with still viable claims if they are not addressed.
Knisely added that from the defense perspective, MDL defendants’ primary concern is how many claims are legitimate. He emphasized the importance of dismissing illegitimate ones early.
The panelists concluded by underlining the importance of advancing legal standards to effectively manage privacy risks in the digital age. They highlighted the ongoing need for legal professionals to remain vigilant and adaptable to evolving technological advances and emerging privacy issues.
THE INCREASE OF FRAUD IN CLASS ACTIONS AND MASS TORTS, PLUS ETHICS OF THIRD-PARTY
FILERS
March 13, 2024 at 10:15 a.m.
Moderator:
Ellen Gusikoff Stewart, Robbins Geller Rudman & Dowd Panelists:
Hon. James Donato, U.S. District Court for the Northern District of California
Jeff Richardson, Digital Disbursements
Brandon Schwartz, EisnerAmper
William Tarantino, Morrison Foerster
Nicole Zeiss, Labaton Sucharow
Authored by Samantha Webster
This panel, moderated by Ellen Gusikoff Stewart, focused on fraud in class action suits from both the plaintiff and defense perspective, including how claims are submitted and how fraud arises in the filing process. The panel, comprising Jeff Richardson, Brandon Schwartz, William Tarantino, Nicole Zeiss, and the Honorable James Donato, described the process and weighed-in on ways to eliminate fraudulent claims and identify bad actors.
To begin, Zeiss gave a broad overview of different types of class actions and the approval process in terms of documentation and administration as it relates to settling a class action case. She explained the documentation procedures are the same no matter the type of class action. Zeiss then outlined the steps in the process, including setting up documentation and settlement stipulation, and described how documentations guide the life cycle of the process. For instance, the settlement agreement contains provisions regarding release, consideration, reverter, common fund (if not yet disbursed), claimsmade settlement, notice procedure, and claims/obligation of claims administrator. Additional considerations are notices and claim forms.
Gusikoff Stewart next asked Judge Donato whether documentation is reactive or proactive, to which Judge Donato stated it is proactive. Judge Donato further stated there are clear issues with AI, but he is optimistic about what AI can contribute to the
law. He also explained there are guidelines for class settlements in the Northern District. Judge Donato recommended the scope of a release needs to be looked at with a critical eye, the use of the customer service relationship is helpful to send out the notice, and notices need to be clear and easy for people to read and understand. Reversion does not happen in the Ninth Circuit, and in Judge Donato’s opinion, it should not happen. He additionally stated administrative fees should not be too high, because the money should go to the victims. What should instead drive the process, he explained, is the recovery for the victims.
Tarantino then introduced the role of defense in the class actions process. Specifically, he said it is more popular to have an increasing rate of legitimate claims without reducing barriers to those being paid. Tarantino emphasized that claim rates need to be low, which can be problematic if there is fraud. With respect to documentation, he stressed the importance of simplifying forms as well as being engaged and involved in the claims administration process.
Cirami and Schwartz discussed the process of how claims are submitted. Cirami described the nexus between third party filers and fraud; if there is a bad actor, like AlphaPlus, they end up in jail. But if there is a good actor, they can help the process and serve as a focal point to speed up the process for clients. Third party filers can be included in this landscape as well, but it is critical for there to be a balance between claims rates and preventing fraud. Schwartz remarked on the ease of working with a third party to help manage the claims process. He introduced a company called “ClaimClam” that helps consumers file, but in practicality only makes the claims process more confusing. Cirami noted the value in having a legitimate third party filer, who has the capacity to improve the class. Schwartz, however, highlighted the issue of privacy when introducing third party filers. Specifically, he explained class members run the risk of having their data exposed once third parties collect and use it. Judge Donato said he amended preliminary approval guidelines to account for something similar because it is necessary to show how an administrator will handle the confidential data of class
members before gaining approval. It would be easy, he explained, for this data to be hacked or sold to data brokers, and thus settlement administrators need to make statements on what these practices are before a class can be approved. Richardson also acknowledged this issue. He stated data lists are being sold, impersonation is leading to data breaches, and closed classes are being penetrated by impersonators. He suggested if a firm or administrator is aware of impersonation, it could limit the payment selection to information such as a class member’s name, email, and phone number.
Zeiss expanded on the process of identifying fraudulent claims to provide additional context. In the securities field, she explained administrators have a watch list by virtue of their analysis of other cases, as well as flagging by human touch point, internal expertise, and collaboration with the FBI and Postmaster General. These names are run through a list to determine whether fraud exists. If names come back as fraudulent, the bad actors would then have to return to prove they are not fraudulent. If they do not come forward, firms like Zeiss’s will threaten to sue the bad actors for fraud. She used AlphaPlus as an example, stating their process was unclear, which led to a lot of money being stolen. Further, she stated there were concerns with trading volume. Although the process of making purchases have not changed, it has become harder to determine things like dark pool markets. Zeiss also highlighted the difficulty of trying to take the bad actor to court when he does not back down.
Gusikoff Stewart next asked Cirami what happens before administrators send thousands of code and purchase data to administrators. Cirami stated it is a big problem if you do not prepare for it. He explained his firm works in the back of many institutions. Class action clients trust his firm with historical trading data, including which stock market they trade on, their residence, documentation issues, and other requirements.
Next, Tarantino explained what happens on the defense side when a case nears approval. Tarantino drew comparisons to the Chico case and the Juul case. In the Chico case, it was necessary to show the court that the settlement was fair and adequate.
However, the number of claims outpaced the number of car seats sold, which was not fair or adequate. In the Juul case, it was recommended that plaintiffs’ counsel collaborate with federal law enforcement. Judge Donato also weighed in, highlighting the uniqueness of the Juul case where the court could independently refer to the U.S. attorney’s office for investigation. Judge Donato recommended promptly informing the court of any issues within the process, whether the claim is in the preliminary application phase or approaching final approval. The court will be less forgiving, he explained, if a party was aware of issues and did not flag them for the court.
Gusikoff Stewart transitioned the discussion to best practices to balance efficiency of the claims. Zeiss advised hiring a proficient administrator, front-loading the work, and leaning on administrators for advice. Tarantino recommended understanding the predictors of high fraud claims and being aware there is a settlement. Further, Tarantino recommended knowing what to be prepared for when the settlement process begins to unfold, relying on claims administrators to predict, using couponhybrid settlements to deter fraud, and using AI tools to detect fraudulent claims. Schwartz highlighted the importance of distinguishing between different types of fraud. He explained, for example, how some fraud is easy to identify, with obvious indicators like foreign IP addresses, selections of digital payments, errors in the filing process, and filings in batches. Judge Donato reiterated the necessity of bringing these issues to the court. Moreover, Richardson provided two insights: (1) responsible use of AI will give more benefits to the process than drawbacks; and (2) many of these issues are fluid, with some cases amenable to proper communication to the court while others are not. Finally, Cirami suggested maintaining a balance between enhancing claims rates while preventing mass fraud.
Lastly, the panel addressed who should bear these extra costs. Schwartz emphasized the need for ongoing communication between parties and agreements that avoid rigid determinations or demand an invoice to be paid. Tarantino advocated the need to put provisions for costs into the settlement agreements. Gusikoff Stewart raised
concern about the accuracy of bids when uncertainties lie ahead, citing the Juul case where administration costs increased by a few million due to the inability to go after the claimant. Finally, Cirami expressed reservations about asking administrators to bear extra costs.
QUICK HIT: NINTH CIRCUIT APPELLATE TRENDS
March 13, 2024 at 11:30 a.m.
Moderator: Glenn Danas, Clarkson Law Firm
Panelist: Hon. John B. Owens, U.S. Court of Appeals for the Ninth District
Authored by Dina Qubain and Connor Fidone
During the second day of the Class Action Forum Conference, Glenn Danas moderated a discussion on Ninth Circuit appellate trends with the Honorable John Owens of the Ninth Circuit. During this quick hit, Danas and Judge Owens navigated the intricate landscape of Ninth Circuit appellate trends. They engaged in a comprehensive analysis of several high-profile cases that have garnered significant attention and reshaped the rules governing class action lawsuits. Judge Owens’ expertise and in-depth knowledge allowed him to shed light on the nuances and complexities of these influential cases, providing attendees with an understanding of their far-reaching implications on the realm of class actions.
Summaries of the Cases
In Kim v. Allison, the Ninth Circuit addressed issues in a class action lawsuit against Tinder over its age-based pricing model. The case specifically focused on the adequacy of the class representative, Lisa Kim, given her agreement to arbitration with Tinder, which had the potential to impact over 7,000 class members not bound by such agreements. The court reversed the approval of a settlement, initially accepted after being revised due to accusations of collusion, because it found the district court had confused the concepts of adequacy and typicality. The appellate court highlighted that Kim's arbitration agreement presented a significant conflict of interest, limiting the scope of claims and potential recoveries for other class members. Additionally, the court noted a lack of rigorous legal action by Kim and her counsel, including insufficient discovery and early concessions in arguments against arbitration. Ultimately, the court
vacated the class settlement's approval and remanded the case, emphasizing the critical role of a class representative in adequately and fairly protecting the interests of the class.
In Lowery v. Rhapsody International, copyright holders filed a class action lawsuit against Rhapsody International (Napster) for copyright infringement, alleging the company streamed music without proper licenses. A settlement awarded the class members a little over $50,000, but the plaintiffs' lawyers sought $6 million in legal fees. Plaintiffs’ lawyers ultimately received an approved $1.7 million from the court, significantly exceeding the class recovery. The court criticized this disproportionate fee award, highlighting how attorneys' fees in class actions should closely reflect the benefit to the class, which was notably minimal in this case. The court deemed the $1.7 million fee unreasonable, given the actual $52,841.05 benefit to the class, and instructed the district court to reassess the fees based on the real benefit to the class members, rather than hypothetical maximums. The court further emphasized fees should be proportional to the class benefit, suggesting a "cross-check" to ensure proportionality. Background information noted the challenges faced by digital music services pre-Music Modernization Act and the minimal impact of this lawsuit's settlement, as most potential class members had settled separately with the National Music Publishers’ Association. The court's decision mandated a reassessment of legal fees to align with the actual, modest benefit to the class, correcting the initial disproportionate award.
In Bowerman v. Field Asset Services, Inc., the Ninth Circuit reversed class certification and summary judgment in a lawsuit where plaintiffs claimed they were misclassified as independent contractors by F ield Asset Services, Inc. The court found that individual inquiries about overtime and expenses made class certification inappropriate. The court distinguished between the Borello and Dynamex tests for classifying employees, noting genuine disputes of fact. The decision clarified when individual damage assessments impact class certification, emphasizing the difference between disputes over the calculation versus the existence of damages. Ultimately, the court vacated the premature award of attorneys’ fees due to these findings.
In Wit v. United Behavioral Health, the Ninth Circuit addressed a case under the Employee Retirement Income Security Act (“ERISA”) where plaintiffs challenged denials of coverage for mental health and substance use disorders by United Behavioral Health (“UBH”). The district court had ruled in favor of the plaintiffs, certifying three classes and entering judgment against UBH. On appeal, UBH argued plaintiffs lacked standing and that the class certification and trial had errors. The court specifically found that the district court abused its discretion by certifying the classes based on the premise that "reprocessing" of claims could be an independent remedy under ERISA, contrary to the statute's provision. The court concluded that the district court erred in its class certification because the plaintiffs could not alter their ERISA rights to fit the class action framework.
In Briskin v. Shopify, Inc., the Ninth Circuit ruled that Shopify's collection and use of consumer data from a California-based transaction did not subject it to specific jurisdiction in California. The court found that Shopify's operation of a nationwide ecommerce payment platform and its indifference to the location of end-users meant that merely extracting and retaining consumer data did not establish sufficient grounds for specific jurisdiction in the state. Consequently, the court affirmed the dismissal of the plaintiff's complaint, which alleged violations of California privacy and unfair competition laws.
Ninth Circuit Trends
In recent decisions, Ninth Circuit judges have demonstrated heightened scrutiny regarding attorneys' fees, particularly within the context of class action lawsuits. This trend reflects a judicial commitment to ensuring settlements genuinely serve the interests of class members rather than disproportionately benefiting legal counsel. The Ninth Circuit’s approach emphasizes the need for attorney fees to be closely aligned with the actual value delivered to the class, underscoring a rigorous review process that seeks to protect class members from settlements that might prioritize lawyers' financial gains
over their clients' recovery. This intensified scrutiny is part of a broader initiative by the Ninth Circuit to enhance fairness and transparency in class action settlements, ensuring awards to attorneys are justly earned and directly correlated to the benefits accrued to the class and thereby safeguarding the integrity of the legal process and the rightful interests of those represented in such actions.
Ninth Circuit judges are known for their meticulous review of case records, a practice reflecting the courts’ dedication to thorough analysis and understanding of case nuances. This contrasts with the Supreme Court, where the sheer volume of cases and broader national legal implications often limit the justices' ability to delve deeply into every record detail, thus relying heavily on the presented record. Moreover, Ninth Circuit judges have emphasized the importance of a complete and comprehensive record from the district court level, advising attorneys to ensure that all relevant documents, evidence, and arguments are included, whether through amendments, motions, or other procedural mechanisms. This exhaustive inclusion is critical; any omission can significantly disadvantage a case, potentially leading to unfavorable outcomes. The emphasis on a thorough record underscores the Ninth Circuit's commitment to justice and the accurate adjudication of cases, highlighting the consequential role of attorneys in diligently preparing their submissions to the court.
Over the past few years, there has been a noticeable decline in court filings within the Ninth Circuit, with a reduction averaging around 5% or more. This decrease has led to a significant alleviation of backlog, resulting in notably smaller case piles. With fewer cases being filed, the workload for the court has lightened, allowing for more efficient processing of the remaining cases. Additionally, en banc hearings, where cases are reheard by a larger panel of judges, have also witnessed a consistent decrease. It is becoming increasingly challenging for cases to proceed to en banc review due to this decline in filings. Some judges, including Judge Owens, have shown a reluctance towards en banc hearings, making it harder for other judges to garner sufficient votes for such reviews. Judge Owens highlighted how the reduction in case filings has allowed
the Ninth Circuit to address long-standing issues more effectively. The court has been able to dedicate more time and resources to complex cases, ensuring thorough deliberation and well-reasoned decisions. Furthermore, the decreased workload has fostered an environment conducive to judicial collaboration, enabling judges to engage in constructive discussions and share diverse perspectives on intricate legal matters. The Ninth Circuit currently hosts the highest number of visiting judges from states like Ohio and Virginia, among others, who contribute to case resolution. Despite the First Circuit technically having more visiting judges, its smaller district size makes it an outlier. Judge Owens predicts that there will be fewer visiting judges in Ninth Circuit cases in the coming years due to a decline in case filings. This reduction in visiting judges is indicative of the circuit's evolving caseload and may impact the dynamics of appellate decision-making.
Cases subject to Rule 23(f) of the Federal Rules of Civil Procedure, which pertains to appeals from class action certification decisions, do not typically arise with high frequency in comparison to other types of cases. Unlike regular cases, where parties submit briefs, argue their cases in court, and await a decision, Rule 23(f) motions function differently. They often involve significant motions, akin to those seen in major cases like the Trump travel ban and are typically granted or denied without a detailed explanation. Oral arguments are rare, placing added emphasis on attorneys to present their strongest arguments upfront, as there may be limited opportunity for further elaboration or clarification in court. This process underscores the importance of thorough preparation and persuasive written submissions from the outset.
As Judge Owens elaborated, the unique nature of Rule 23(f) appeals requires attorneys to exercise exceptional care and diligence in crafting their arguments. The lack of oral arguments means that written briefs carry immense weight, serving as the primary mean of persuasion for the court. Consequently, attorneys must meticulously present their cases, leaving no stone unturned in their legal analysis and factual representations. Every word and every argument must be carefully chosen and
substantiated, as the opportunity to clarify or expand upon their positions may be limited.
Overall, the Ninth Circuit Appellate Trends panel at the Class Action Forum Conference provided attendees with invaluable insights into the evolving landscape of class action litigation in the circuit. From the heightened scrutiny of attorneys' fees to ensure fairness and proportionality, to the emphasis on comprehensive record preparation and the unique challenges posed by Rule 23(f) appeals, the panelists shed light on critical issues directly impacting the practice of class action law. As the Ninth Circuit continues to adapt to changing caseloads and prioritize thorough deliberation, attorneys would be well-advised to stay abreast of these trends and tailor their strategies accordingly. By doing so, they can better navigate the complexities of class action proceedings and effectively represent the interests of their clients within this influential circuit.
ETHICS: T HE INCREASING ROLE OF TECHNOLOGY AND AI
March 13, 2024 at 1:15 p.m.
Moderator: David McGowan, University of San Diego School of Law
Panelists:
Marta Alcumbrac, Nemecek & Coley
Heather Rosing, Klinedinst
Authored by Joseph Blair
In this panel, moderator Professor David McGowan and panelists Marta Alcumbrac and Heather Rosing gathered to discuss the ethical issues at play in the use of generative artificial intelligence (“AI”) in the field of law. The panel’s discussion largely focused on how current rules of professional conduct can aid attorneys in the use of generative AI in their practice. Additional topics included the current AI tools available, the upcoming burgeoning software industry to aid the practice of law, and the State Bar of California’s Standing Committee on Professional Responsibility and Conduct’s Practical Guidance for the Use of Generative Artificial Intelligence in the Practice of Law. Though AI may be daunting, Professor McGowan concluded that ethical issues surrounding the use of AI pose no more of a challenge than past technological innovations in the practice of law.
Professor McGowan began the panel by discussing HAL, the main antagonist of the film 2001: A Space Odyssey. HAL introduced most people to AI. Though current AI technology is not as advanced as HAL, the lightning pace of AI development in the field of law will likely present challenges to practitioners. Rosing stressed the importance of learning the ethics encompassing AI for its inevitable use in the practice of law. Alcumbrac reflected on a conference she recently attended in Las Vegas where numerous vendors displayed available software and AI programs available for attorneys to use. The legal field is currently projected to be one of the top three industries impacted by AI, with 44% of practitioners likely to be exposed to the use of AI
in their work. Legal tasks potentially affected includes legal research (65% potential) and drafting and reviewing of documents (55% potential). Using AI for these types of tasks creates issues regarding client confidentiality when disclosing information to an AI program. This is especially true if there is any HIPPA-protected information. Attorney competence under the California Rules of Professional Conduct Rule 1.1 requires attorneys understand to a reasonable degree how the AI technology works, its limitations, and the applicable terms of use and other policies governing the use and exploitation of client data by the AI product. Some courts have required counsel to disclosure AI use. Prof essor McGowan stressed that while breach of confidentiality cases are currently not common, he believes it is inevitable that confidential documents will be leaked to third parties due to AI use.
Next, the panel discussed ethical billing when using AI. Generative AI will be able to perform certain legal tasks more efficiently, with some vendors claiming 80% increased efficiency. However, because attorneys can only charge for the time spent on each task, AI use may lead to a reduction in revenue for attorneys. The panel recommended practitioners adopt value-based billing, contingency, or flat billing rates to account for AI benefits. Alcumbrac highlighted the importance of understanding the technical and ethical rules surrounding AI as mandated by recent guidelines set by the California Bar in 2023. Business and Professional Code §6068(e) and Rules of Professional Conduct 1.6 and 1.8.2 stress that legal practitioners must comprehend how AI tools function and manage the data they process, including ensuring the security of client information and scrutinizing the end-use of collected data, whether for AI training or other purposes. She emphasized AI's effectiveness increases with access to more data, which underscores the need for robust data management strategies. She also pointed out the necessity of clear communication with clients regarding the use of AI, advocating for explicit disclosures in retainer agreements. She noted an increase in AI vendors promoting legal services including brief writing and discovery; attorneys must be vigilant about the terms of use of these AI programs to ensure client data is protected.
Professor McGowan noted similar confidentiality concerns and the importance of reviewing the terms of use of AI tools to understand how companies handle sensitive information. He compared the data handled by AI tools to that of existing legal research platforms like Westlaw. Professor McGowan suggested the mechanisms for protecting data from AI programs are not fundamentally different, but require careful oversight to prevent misuse. He also argued data input into AI systems must not be inappropriately reproduced. He did clarify, however, the security issues presented by AI are similar to issues law firms already manage when dealing with electronic document storage and handling.
Professor McGowan additionally questioned whether attorneys will be forced to use AI. If the adoption of AI leads to a significant reduction in billable hours (estimates are 20-25%, with some arguing up to 80%), this will lead to a shift in the role of the attorney from drafting to editing. He believes this shift would be similar to firm’s forgoing extensive legal libraries to using online subscription-based services like Westlaw and Lexis. Alcumbrac raised concerns about the implications of AI for associates who currently handle motion writing and similar tasks. She predicts that AI tools capable of performing these tasks may eventually eliminate some traditional associate roles. Alcumbrac also anticipates that the integration of AI will necessitate changes in legal education. Rosing noted that if AI is as efficient as projected, attorneys may need to use it to save costs and ensure legal fees are not unconscionable.
The final topic the panel discussed pertained to attorney supervision. The panel agreed AI-produced documents are no different than those produced by an associate under supervision. The panel emphasized the importance of supervising attorneys ensuring that associate attorneys, vendors, and non-lawyers adhere to their ethical obligations when utilizing AI tools. This entails robust supervision to guarantee AI is employed ethically and according to professional standards.
Alcumbrac discussed a Florida case that cautioned firms to provide clear disclaimers to ensure transparency when prospective clients interact with chatbots used
by law firms on their websites. This concern will only compound if AI is used to widen the ability and depth of topics the chatbot can discuss with potential clients. While California has yet to address this issue directly, she anticipates regulatory developments in this area. Rosing stressed the importance of disclaimers to ensure that inadvertent disclosures to a chatbot does not lead to the formation of an attorney-client relationship.
Rosing also delved into the legal implications of AI-generated content, citing the case of Mata v. Avianca in the Southern District of New York. In this personal injury case, the attorney’s Affirmation of Opposition contained fictitious cases produced by AI. The attorney was referred to the bar for acting in bad faith and providing false and misleading statements to the court. This case has led to several judges banning the use of AI in their courtrooms. One issue with a blanket ban on AI is that it is already used in software through word auto-filling. Alcumbrac believes disclosure to the court is a better alternative than a blanket ban. Professor McGowan countered the concerns about AI's ineffectiveness, asserting that advancements such as GPT -4 passing the bar exam signal AI's potential to improve and become highly adept in legal tasks. Rosing predicts the future standard for AI use will involve attorney verification of AI-generated content, citing a recent case where AI-generated content contained inaccuracies that were only revealed upon closer scrutiny by the court.
The panel concluded with a question from a student over fears that AI will eliminate jobs for young attorneys. Rosing offered her perspective on the transformative nature of AI, envisioning a future where attorneys are liberated from mundane tasks and can focus on more complex and fulfilling work. However, she also emphasized the need for attorneys adapting to these changes to remain competitive in the evolving legal landscape.
QUICK HIT: SOCIAL MEDIA
March 13, 2024 at 2:15 p.m.
Moderator: Dana Rager, Western Alliance Bank
Panelists:
Jessica Grant, Shook Hardy & Bacon
Alexandra Walsh, Walsh Law
Authored by Allan Babiner
Dana Rager moderated this panel which comprised two attorneys with expertise in social media and privacy law litigation, Jessica Grant and Alexandra Walsh. The panel cent ered around the liability social media platforms hold in cases involving harm done to users, considering social media platforms serve as the medium in which these incidents arise. The harm done to children and adolescents was particularly pressing, as both Walsh and Grant serve as counsel in litigation alleging social media platforms are unsafe for children due to increasing grooming and sex trafficking.
There is a pending MDL addressing a claim that social media companies are purposely designed to be addictive, with their business models attempting to maximize time users are kept engaged with the screen. Young people are particularly vulnerable to these addictive qualities and spend increasingly more time on screens and in the digital world. Here, it is all about single use and “hours of continuous use,” where targeted demographic are kids between the ages of ten and fourteen. The more time children and young people are spending online, the more instances of children being exposed to extremely inappropriate content, grooming, and sex trafficking have occurred. Walsh used Roblox as an example, explaining that Roblox claimed to be safe for kids to play, learn, and interact with other children online, yet it was anything but safe. This lawsuit was brought under consumer protection laws because it was marketed as a safe place, but has been alleged to have committed consumer fraud.
Walsh’s clients, the plaintiffs in this litigation, have fallen victim to sex trafficking and grooming, for example.
Along with the Roblox litigation, another MDL involving Facebook, Instagram, and TikTok is proceeding primarily on a products liability theory. The plaintiffs proposed that these design defects and failure to warn are an extension of the products liability principle that these companies should have done more to warn kids about risks associated with their products. However, the defense argued that social media is not a product. Rather, the defendants alleged social media platforms are an intangible collection of services or software algorithms. Some courts have accepted this interpretation, thus prohibiting plaintiffs from suing on a products liability theory.
Section 230 of the Communications Decency Act of 1996 was the primary defense to these recent claims against social media companies. Grant argued on behalf of the defense that these claims are a creative way to circumvent Section 230 because plaintiffs are trying to hold social media companies liable for content created by third parties. For example, if a user buys fentanyl laced drugs over Snapchat, plaintiffs want to hold Snapchat liable for the harm, despite Snapchat having no role in the interaction between the user and the drug dealer. The defense has contended that these conversations could have taken place through phone text messages or another means of digital and remote communication, so it would be improper to hold a social media platform liable for a conversation that could have inevitably occurred on a different medium of communication. Furthermore, Section 230 was originally enacted because there was litigation where someone tried to hold a social media company accountable for third party content. Congress justified Section 230 by reasoning that if 1% of users get hurt, placing liability on the social media company would merely disincentivize companies to even try in the first place. Further, social media companies monitoring private messages, pictures, and conversations poses privacy issues and could create problems on their own. Thus, the defense argued that holding
social media companies liable defeats the purpose of enacting Section 230.
The plaintiffs responded that if a platform like Snapchat wants to allow drug dealers to conduct business or to allow other forms of this type of communication on their platform, they need to warn parents. As it stands, it is difficult for parental controls to be utilized on social media, leaving parents out of the loop and allowing children to have unregulated communication with those who could bring them harm. Walsh argued that these companies know this activity is happening on their platforms, and companies have a responsibility to make sure parents understand the risks to limit their liability and ensure they are doing their due diligence to protect young people. However, Grant argued the plaintiffs’ bar mirrors the language plaintiffs used when suing Big Tobacco. The rebuttal to which is, why is it “out of bounds” for companies to want to maximize their product? Succinctly, it is not nefarious for companies to want consumers to use their products. Furthermore, what makes these cases challenging for the defense are plaintiff’s inflammatory arguments demonizing social media companies and misplacing responsibility that should instead be primarily attributed to the user engaging in criminal activity. Moreover, social media provides a huge benefit: people are able to connect with those in their group and community. Thus, limiting social media platforms based on the actions of third parties who engage in criminal activity would harm those who use social media to enrich their lives.
A tricky issue for plaintiffs is proving causation. This is showcased by the example of someone arranging for a drug deal through social media but fulfilling the actual drug deal outside the use or scope of social media. Grant argued if the communications had been done on a phone as opposed to social media, it would be absurd to hold the service provider liable. Plaintiffs would respond by saying young girls who use social media have higher rates of suicide, eating disorders, and other negative effects. They would further argue the blame should not fall on the young people, but instead the companies who facilitate and control the means of communication and expose young people to this content. Plaintiffs would emphasize
these companies need to do more to ensure this particularly vulnerable population is protected while using their product.
Society accepts certain risks associated with necessities like automobiles, but rejects others, such as tobacco. A plausible rationale is tobacco has less social and economic benefits compared to cars. Regardless, it is important to note each case is different, and many companies work extensively with law enforcement to attempt to combat criminal activities occurring on their platforms. The claim is not to take down social media, but refine the social media digital landscape to allow young people to reap the benefits social media brings without placing innocent lives at risk. Overall, both sides of the litigation are prioritizing young people’s health and well-being.
MDL PANEL
March 13, 2024 at 3:00 p.m.
Moderator:
Shawn Miller, University of San Diego School of Law
Panelists:
Hon. Roger Benitez, U.S. District Court for the Southern District of California
Hon. Karen Caldwell, U.S. District Court for the Central District of Kentucky
Rebecca Bazan, Duane Morris
Nick D’Aquilla, Counsel Financial
Jean Martin, Morgan & Morgan
Julie Park, Morrison Foerster
Alexandra Walsh, Walsh Law
Authored by Kelly Wacker
On the second day of the Class Action Forum, the Honorable Roger Benitez, the Honorable Karen Caldwell, Alexandra Walsh, Rebecca Bazan, Julie Park, Jean Martin, and Nick D’Aquilla presented on Multidistrict Litigation (“MDL”). Moderated by Professor Shawn Miller, the panel discussed a variety of topics including the MDL process, potential changes stemming from the proposed Federal Rule of Civil Procedure (“FRCP”) 16.1, strategies for case management, implications of third-party litigation funding, amendments to Federal Rule of Evidence (“FRE”) 702, attorney fees, and recommendations for effective practices when appearing before MDL judges.
I. Overview of the MDL Process in Federal Courts
Judge Benitez opened by giving an overview of the MDL process. The Judicial Panel of Multidistrict Litigation (JPML) is composed of seven judges all from different circuits. The Chief Justice makes the appointments which last seven years. Judges meet every other month in a different location to have hearings. Attorneys come to discuss whether actions should be centralized, and if so, where and to which judge. Each attorney is given only one or two minutes to speak, so there is little opportunity for advocacy. Judge Benitez reminded attorneys that judges read the briefs, so in the
hearing, it is most effective to use the time to inform the judges of any new developments, and if not, emphasize a key point.
The JPML’s purpose is to identify actions pending in one or more districts with a common question of fact (one common question is sufficient). The expectation is to promote just and efficient resolution of cases by consolidating cases, minimizing discovery, minimizing expenses, avoiding inconsistent dispositive and positive rulings, and getting cases settled. The JPML does not decide cases on the merits; it only decides whether there is a common question of fact which should be centralized in one court to do pre-trial proceedings, unless there is a 28 U.S.C. §1404 transfer or party stipulation.
JPML judges consider various factors in deciding whether to centralize the cases, including: the nature, number, and complexity of the common question(s); the number of cases pending; the number of districts in which actions are filed; if there is a way to eliminate duplication of proceedings; whether common counsel is representing numerous clients; if the proceedings more advanced in some cases than others; and whether unnecessary delay can be avoided. Once a case is centralized, the JMPL then decides the best district to host the centralized proceedings. The JPML considers additional factors in making this choice, including which courts have heavy caseload and which do not; if other MDLs are pending in that court; which court has the greater number of cases overall; where the first case was filed; and which judges are most experienced in handling MDLs.
When considering which judge in the district to assign the centralized proceedings, the JPML considers how MDL cases are difficult and can take up a lot of time. Some judges are simply not interested, while others have a heavy workload. When there is a complex MDL case, the panel typically sends the case to a judge with prior MDL experience. Additionally, the panel can transfer a case before a judge who does not have one of the individual cases pending before them, and are always hoping to find new judges willing to take MDLs.
II. Statistics and Trends in MDLs
Judge Caldwell presented the current statistics and trends of MDLs. There are currently 167 MDL dockets pending, which is the lowest in a long time. Typically, there are between 180 and 200 dockets. There are five MDLs with more than 10,000 cases and twenty MDLs with more than 1,000 cases, but the bulk of MDLs have between 100 and 1,000 cases. While this is the lowest docket, these MDLs have a higher number of cases. The majority used to be antitrust cases but there has been an increase in products liability cases. In 2023, there were twenty-nine motions for centralization. Nineteen were filed by plaintiffs and ten were filed by defendants. Twenty motions were granted, meaning there was about a 68% grant rate. This is also higher than the usual rate, which is usually around 50%.
As for trends, Judge Caldwell noted that the 3M case is winding down. There are also new issues with the use of bankruptcy filings to limit MDL exposure in tort cases. Judges are also now, more than ever, focusing on diversity in appointing leadership. Two examples include the Samsung data breach and the hair relaxer litigation, where there is a variety of talent involved in the leadership team. The judges have experimented with rotating leadership, depending on the nature of the team. The judges want to ensure new lawyers are getting chances to participate in MDLs. However, while it’s no longer an “old boys club,” the judges still want people with the most experience. As the federal bench is becoming more diverse, there is a natural movement towards considering people of all backgrounds.
III. FRCP 16.1 and Diversity
Park and Martin next discussed FRCP 16.1 and diversity. FRCP 16.1 governs when and how parties exchange factual information. It is largely discretionary and does not impose obligations on MDL judges. Without any mandatory provisions, practitioners are concerned that it will not have any major changes to the status quo. Plaintiff and defense counsel agree that the way the rule is proposed leaves many questions. There is concern the rule does not go far enough to address the problems the committee wanted to address. While the number of MDL cases is skyrocketing, without 3M, it will go back down so, is there truly a problem?
IV. Case Management Conference Challenged with Mass Torts
Walsh discussed the issue of potentially unfounded claims from the plaintiff perspective. She explained that the initial assessment of a mass tort will never achieve the same level of granularity as in a single case. While the importance of vetting clients is recognized, mass tort cases can simply get too big in response to the creation of an MDL. This could potentially dilute those who have real and valid claims.
V. Third-Party Litigation Funding
Some people worry that litigation funders are controlling the cases, but D’Aquilla explained that firms have diversified dockets, which funders cannot control. It is important to choose a finance firm with expertise because these are complex cases with durational risk. Judge Caldwell noted that judges are starting to make more inquiries and requiring plaintiff firms to disclose financing in camera. This ensures the law firm is the one driving the litigation, not the financier.
On the other hand, the core product is to help contingency firms access operating capital. Litigation financing can provide an avenue for newcomers to enter the field of MDLs, if properly used and monitored by judges and lawyers. These are incredibly expensive projects with incredible amounts of risk, so MDLs tend to draw in people who already have a lot of capital.
VI. FRE 702 Expert Witness Amendment
Bazan explained that the new FRE 702 deals with expert admissibility. FRE 702 became effective December 1, 2023. The defense bar was in favor of the amendment, while the plaintiff bar was not. Now, expert evidence must be shown by a preponderance of the evidence to be admissible. From the defense perspective, particularly in sciencebased and pharmaceutical cases, there can be problems with plaintiff’s experts. Judge Benitez said this reminded him of the tobacco cases, where causation was required to be found in each individual case. FRE 702 seems to expedite a general finding on causation. From the plaintiff perspective, there is now confusion where people think the judge is deciding by a preponderance of the evidence, as some judges have begun to use the amendments to parse the science. But the question is more about whether there is a sound methodology; the jury should be left to find the factual determinations.
VII. Volkswagen Attorney Fees Order
Martin explained the interpretation of the settlement agreement in Volkswagen is reasonableness for class counsel and is limited to those being appointed. It is seen as a precaution that counsel will not be paid unless they have an appointment. As a consequence, there have been extensive leadership slates due to concerns attorneys may not receive compensation. But this is not unique to MDLs; it also applies in class actions. Martin recommended putting in time protocols early to show what work will be compensated.
VIII. Recommendations in Front of MDL Judges
As mentioned above, Judge Benetiz proposed that when addressing the JPML panel, attorneys should present novel information. This may entail discussing newly filed cases, expanding the caseload to warrant a MDL, or highlighting significant issues pertinent to a case. Attorneys should refrain from delving into the merits, however, as MDL judges do not adjudicate the case. Another effective approach, even if there is no additional information to contribute, is for attorneys to indicate their readiness to respond to any inquiries from the panel.
Judge Caldwell reemphasized that attorneys should not argue the merits of the case during their limited time before the panel, and instead should underscore common interests of fact and why an MDL would promote fair and efficient justice. Given the unique aspects of each case, it is beneficial to inform the panel about the preferred litigation venue and the reasons behind the choice, including how a specific judge’s expertise can enhance fairness for all parties. Providing insights into the most suitable litigation venue and the qualifications of a particular judge greatly aids the panel in its deliberations.
CLASS CERTIFICATION AND SETTLEMENT ISSUES
March 13, 2024 at 4:00 p.m.
Moderator:
A.J. de Bartolemo, Tadler Law
Panelists:
Hon. Andre Birotte, Jr., U.S. District Court for the Southern District of California
Hon. Fernando Olguin, U.S. District Court for the Central District of California
Lucas Gilmore, Hagens Berman
Todd Seaver, Berman Tobacco
Lisa Smith, Phillips Lytle
Claudia Vetesi, Morrison Foerster
Authored by Anthony Cardon
On the second day of the 2024 Class Action Law Forum, a group of experienced practicing attorneys — A.J. de Bartolemo, Lucas Gilmore, Todd Seaver, Lisa Smith, and Claudia Vetesi — along with two federal district judges — the Honorable André Birotte, Jr. and the Honorable Fernando M. Olguin — provided insight into the complicated and ever-evolving process of certifying a class in a class action lawsuit. The panel spanned a variety of topics, including major changes seen over the past few years, best practice tips during settlement negotiations, methods for streamlining the litigation process through proper notice, and the use of settlement administrators.
In addressing major changes in the class certification stage over the past five years, Gilmore explained that in securities class actions, reliance is an element of a consumer class action claim. But during the certification state, an incorporated efficient market is presumed. Essentially, the market price will incorporate the available information as well as mistake or misstatements that are made. This changed around 2014, when the U.S. Supreme Court ruled in Haliburton II that some statements did not have an impact on the price because the price already incorporated the expectations for the company. Gilmore believes class certifications are trending toward being akin to a “mini” summary judgement.
In defending against a class action claim, Vetesi explained how most cases are now brought under state unfair competition laws. She explained which elements of a claim defendants are keen on disproving, such as consumers reading and relying on a label, statements material to the purchase, and any damages resulting from a consumer not knowing key information about a product prior to the consumer purchasing the product. She also discussed how much of the “reliance” element is backed up by using polls designed to gauge how an average individual may arrive at certain assumptions about a product based on how it is advertised. She noted instances where some judges dismissed cases based on poll questions when asked in a flawed manner. Additionally, Vetesi mentioned the increasing use of Daubert at this stage to strike the opposing side’s experts and weaken claims against the defendant.
Seaver then provided the changes in the class certification stage from an antitrust plaintiffs perspective. Overall, he agreed the trend has gravitated more towards a mini summary judgement type scenario where cases can be won or lost at Daubert evidentiary hearings. He noted how many federal circuits now require district courts to determine the admissibility of an expert witness, which can make-or-break a case in its ability to move forward. Seaver also referred to a practice in the Northern District of California known as “hot-tubbing,” where judges require both parties’ experts to come together in an evidentiary hearing to discuss the top three or four issues they believe are most pressing in the case. Although the defense’s experts usually outnumber the plaintiff’s at these hearings, Seaver found this practice beneficial because it allowed parties and the judge to get to the heart of the case, rather than having to sift through thousands of pages of the experts’ reports.
Judge Olguin and Judge Birotte later weighed in to describe the changes they have seen in class certification from a judicial standpoint. Judge Olguin noted the increase in expert motions for class certification. He explained how that in the past, there were usually no hearings for those types of motions. Rather, a judge was usually able to make a ruling based on the briefs alone, but that has since changed. Judge
Birotte provided input on settlement agreements. While judges used to bear some resemblance to “rubber stamps” in the past, Judge Birotte no longer believes that to be the case. He explained how if he does understand the specifics in a particular settlement agreement, he will ask the lawyers to provide an expert to assist him in determining whether to approve a settlement. Judge Olguin agreed with this sentiment, and added how judges have a fiduciary to the class, ensuring the class is adequately protected.
Judge Olguin expressed his belief the 2018 FRCP 23(e) revisions to be warmly regarded, but noted lawyers are now improperly citing a presumption of reasonableness, which has changed post-revision. Judge Olguin also approved of the trend where attorney’s fees are separated out from the underlying agreement. As a concluding note, Judge Olguin also emphasized how the In re Bluetooth factors should be at the forefront of lawyers’ minds in drafting settlement agreements.
Vetesi then expanded on the topic of settlement agreements, noting when representing a defendant, it is important to take settlements seriously during the release of liability portion. She specifically advocated for ensuring consumers receive real money for their claim rather than “coupon settlements,” and stressed the need for defendants to show that there was no collusion involved in the settlement negotiations. Vetesi also believed it was a good strategy for defendant’s counsel to make the broadest class possible to protect the defendant in the release.
Gilmore explained the benefit of adding statistics and information in the settlement agreement and defined who qualifies as a member of a class at various stages in the timeline. He added that settlement administrators are very helpful in negotiation and the settlement process. Seaver agreed everyone can benefit in the negotiation process and a settlement administrator can help find that common ground.
Shifting the conversation towards settlement administrators, de Bartolomeo noted how settlement administrators are experts in their field and should be included in the process. Seaver also explained that not all settlement administrators are the same. The role has mainly been taken on by data companies who have vast computing power
capabilities and proficiency in analytics. As a matter becomes increasingly more complex, he believes these administrators need to prove themselves. He also expressed his belief that the best bid is not always the lowest bid in the search process. Once an administrator is selected, Seaver emphasized the uniqueness of each settlement when it comes to notifying the class members about the lawsuit. He noted this places the defendant’s due process rights at stake, and thus disseminating this information the right way is important, especially for ensuring the defendant’s reputation is not disparaged.
Further on the topic of notice in a class action, Vetesi discussed the difficulty in the process considering 90% of class members are required to be contacted for direct notice. She explained the contact information for many people is often difficult to attain without making the issue completely public. Finding the total number of members, for example, in a food-type class action case, is difficult because it is often unknown how many consumers exist. Therefore, the final settlement number often hinges on just the claims themselves. Gilmore explained in a securities class action case, some of the most pointed notice-based questions focus on the identification of the lead plaintiff. The discussion turns on when the main plaintiff was notified, which in turn helps the court determine the settlement award due to the main plaintiff (often relying on the market rate at that time).
From the judicial perspective, Judge Olguin discussed how the Central District of California follows a similar order as the Northern District of California. He mentioned preliminary approval by the judge as an important step in allowing a damages amount to proceed. He pointed to Radcliffe as a case providing guidance on judicial scrutiny in the Ninth Circuit. Judge Olguin added it is important to consider class members who do not speak English when determining proper notice in varying cases. Agreeing on the languages issue, Judge Birotte stressed the importance of remembering the point of the notice. He emphasized when determining the method of notice, the class members right to be informed of the issues in the lawsuit cannot be forgotten.
In closing, the panel discussed the use of a “science day” to help the court get a better grasp of what happened in the case. The panelists agreed especially in complicated cases, such as patent, product defect, or trade secret cases taking the time to explain the technology is beneficial to the proceedings.
ETHICAL CONUNDRUMS ASSOCIATED WITH LITIGATION FUNDING, NON-LAWYER FIRM OWNERSHIP AND FEE SHARING
March 14, 2024 at 9:15 a.m.
Moderators:
Richard Arsenault, Neblett Beard & Arsenault
Erin Copeland, Fibich Leebron Copeland & Briggs
Panelists:
Hon. Karen Caldwell, U.S. District Court for the Eastern District of Kentucky
Alyson Beridon, Herzfeld Suetholz Gastel Leniski and Wall PLLC
Francesca Castagnola, Western Alliance Bank
Nicholas J. Drakulich, The Drakulich Firm
Authored by Alexandra Moynihan
During the final day of the 2024 Class Action Law Forum, a distinguished panel of lenders, attorneys, and the judiciary engaged in a discussion of the ethical considerations of litigation funding and non-lawyer firm ownership and fee sharing within the legal community. Moderated by Erin Copeland, the panel featured Francesca Castagnola, Nicholas Drakulich, Alyson Beridon, and the Honorable Karen Caldwell. The discussion centered around lawyers specifically in the mass tort space who utilize third-party litigation funding, the new practice of firms sharing ownership interest and profit with non-lawyers, and how these practices can raise alarming conflicts with lawyers’ ethical obligations to their clients.
The panel began with Castagnola explaining the different “flavors” of litigation funding available for mass tort plaintiff lawyers. First, there are traditional banks, who often require firms to identify more than one source of repayment and require a consistent cash flow from the firm. Traditional banks rarely know how to value complex litigation and still instruct receivables to be paid in 30–90 day periods. Firms must also provide FDIC insurance and guarantee deposits, which can have a crucial impact on plaintiff settlements. There are also nontraditional banks who understand the nuances of the complex litigation space. These funders know there is lumpy cash flow and the lengthy amount of time it can take to settle a mass tort case. These banks do not require
money to be paid every month, but still require a diverse inventory and recourse back to the borrowers. The third litigation funder is a non-bank finance company. While these funders do not fit the profile of a bank, they are looking for the same thing: a consistent cash flow and a diversified inventory. These funders evaluate the collateral, how law firms triage cases, and how repayment will be made. The final category of funding explained by Castagnola was the primary focus of the panel: true litigation finance. These funders are private equity companies who explicitly seek out specific litigations within a law firm to finance. The company will even lend money to the firm to amass inventory or cases. Often, firms who would not otherwise have the resources to take class actions will decide to pursue class claims with third-party funding because the company will agree to fee sharing.
There are arguments both for and against the use of third-party litigation funding. Drakulich explained those who argue in favor of litigation funding claim the practice allows individuals access to justice who might otherwise be unable to seek their claims. It is common knowledge that mass tort cases are very complex and expensive to litigate. Giant corporations often have no shortage of funds to defend these claims, so allowing plaintiffs access to similar finances can level the playing field. Third-party litigation funding provides a different vehicle of financing for attorneys and claimants who may not have the means for the traditional form of financing. Drakulich pointed out that creating a financial path for younger and more diverse lawyers allows the next generation of attorneys to enter a space they were otherwise precluded from engaging in.
Drakulich also called attention to the drawbacks associated with third-party litigation funding. First, Drakulich explained how third-party funding can encourage the phenomena colloquially known as “park and ride” lawyers. This occurs when an attorney, who may not be experienced in the mass tort space, identifies a MDL and then believes he or she only needs to find cases and file complaints, while relying on others to do the discovery, prove up the case, and address the common legal concepts, to get a
“pay out.” Third-party funding provides resources to park and ride lawyers who accumulate masses of cases in MDLs and then fail to diligently pursue these cases, therefore breaching their ethical obligations to their clients. Not only do the actions of park and ride lawyers reflect poorly on themselves, but it can frustrate judges and make them inclined to dismiss entire blocks of cases that are not progressing. Another drawback is the high interest rates attorneys deal with from third-party funders. Specifically, these attorneys are subjected to the mercy of these funders, who may have a certain level of control over how lawyers conduct their practice and manage their dockets. Copeland remarked that ultimately, third-party funding may not give injured individuals more access to justice.
Judge Caldwell reflected on her extensive experience presiding over MDLs and how she evaluates a lawyer’s use of third-party funding. An essential duty for judges overseeing MDLs involves appointing a leadership committee to handle and oversee the mass tort litigation on behalf of every party within the MDL. Most judges follow a manual for complex litigation published by the federal judicial center. The manual establishes that a judge should consider the willingness and availability of an attorney to commit to a time-consuming project, including whether the attorney will have enough funding to allow them to lead such complex litigation. Many judges decided funding is an appropriate inquiry when determining the leadership. Additionally, many believe there is an ethical obligation placed on the committee to ensure they have the backing to pursue the interests of all claimants within the MDL. However, Judge Caldwell emphasized establishing a leadership team does not negate the individual lawyer’s ethical obligations to their own individual clients.
Within the past few years, there have been impressively large MDLs, or “mega cases,” requiring the leadership to have the appropriate resources to devote to the litigation. As cases get bigger, it becomes more important to engage in extensive inquiries regarding the law firm’s ability to finance. Judge Caldwell warned that judges should remain vigilant while reviewing the finances of firms who may be utilizing third-
party funding and are therefore subject to potentially predatory lending practices that effect settlement discussions. Drakulich echoed Judge Caldwell’s sentiments, emphasizing the need for courts to assess the implications of third-party funding when determining the leadership in mass tort cases. Specifically, he expressed concern that judges should determine the level of control exercised by the funders, wondering whether it dilutes the lawyer’s own control over the case. Drakulich reiterated the lawyer’s responsibility to represent clients pursuant to the model rules, irrespective of the lender.
All panelists agreed third-party litigation funding is presently a hot topic debated amongst legal professionals. They discussed ongoing efforts to amend the Federal Rules to require disclosure of funding. Copeland questioned whether this would lead to a reciprocal obligation for the defense side to disclose its own funding as well. Castagnola reflected how disclosure requirements would affect the negotiating power of the parties and alter the bank’s evaluation of risk. Beridon further added that requiring financial information from lenders, which was previously undiscoverable, would allow another party to “gas” the opposing side out of resources, forcing a resolution based not on the merits of the case but rather due to depletion of funds.
Next, Beridon reflected on a new concept emerging within the legal profession: the Alternative Business Structure (“ABS”). This concept allows non-lawyers to hold ownership in law firms thus entitling non-lawyers to share the fees. Structurally akin to a corporation, an ABS is operated by officers who undergo a significant approval process. An ABS must have a compliance attorney acting as general counsel who is required to self-report any ethical violations committed by the ABS. The ABS gained traction in Arizona, where the state abolished Model Rule 5.4 (i.e., the general rule that a lawyer or law firm shall not share legal fees with a non-lawyer.) Beridon voiced the main concern of the ABS, namely, that a portion of the firm’s ownership interest and resulting fees now belongs to individuals who are not bound by the ethical obligations tethered to the practice of law.
The emergence of the ABS and similar non-lawyer entities engaging in fee sharing raises significant ethical and regulatory concerns in the legal community.
Beridon noted that while some jurisdictions, such as within the United Kingdom and Australia, permit similar types of non-lawyer ownership and have not yet seen an uptick in complaints, the question remains whether this practice has increased access to justice. Further, there is already widespread push back against the ABS in the United States. For example, the ABA reaffirmed its support of Model Rule 5.4, claiming nonlawyer ownership is inconsistent with the core values of the legal profession.
Additionally, there is a proposed rule to limit the amount of third-party funding allowed to ABS firms. The panelists agreed there is a complicated relationship between nonlawyer firm ownership and legal ethical standards, and it remains to be seen how the two will co-exist, as the issues are just beginning to scratch the surface.
To conclude the panel, Judge Caldwell gave a final warning to the audience: while the use of litigation funding and the ABS may continue to rise within the legal community, it is of utter importance for lawyers to always operate within the ethical confines of the legal profession.
ARTIFICIAL INTELLIGENCE IN THE MASS TORT SPACE AND THE ASSOCIATED ETHICAL OBLIGATION
March 14, 2024 at 10:15 a.m.
Moderators:
Richard Arsenault, Neblett Beard & Arsenault
Erin Copeland, Fibich Leebron Copeland & Briggs
Panelists:
Hon. Roger Benitez, U.S. District Court for the Southern District of California
Dawn Chmielewski, Neblett Beard & Arsenault
Ashlie Case Sletvold, Peiffer Wolf Carr Kane Conway & Wise
Nick D’Aquilla, Counsel Financial
Authored by Lucas Tekin and Samantha Webster
Moderated by Erin Copeland, panelists included the Honorable Judge Roger T. Benitez, Dawn Chmielewski, Ashlie Case Sletod, and Nick D’Aquilla. The panel provided perspectives on AI in mass tort litigation and in the legal field.
First, D’Aquilla provided an overview of AI in the legal field. He introduced two ways of approaching AI: automation of tasks, which is more widely seen in the mass torts space, and true artificial intelligence, in which a mechanism can think for itself and is rarer in the legal landscape. Copeland then introduced the ethical impacts of expecting AI to “spit out” desired results and the dangers of filing briefs without prior lawyer review. The panel concluded that while AI may become useful in the future, lawyers are still necessary in the practice of law.
Judge Benitez gave an optimistic judicial perspective of AI. He predicted AI would make the legal profession more accessible and efficient. He held a similar perspective to Judge Donato in the prior panel: the belief that AI will grow and enhance the legal field by separating meritorious and non-meritorious cases. Judge Benitez stated that his court, and many others, are currently working on guidelines which will mandate disclosure when generative AI is used in drafting legal documents. Taking Judge Benitez’s view of generative AI as a signal for how future courts will treat AI, it is clear judges will accept the technology so long as it is used responsibly, competently,
and with positive effect to the legal practice. Judge Benitez concluded that while AI can streamline the legal process, courts still want lawyers to “do the work”.
Chmielewski next explained how AI aligns with the Model Rules of Professional Conduct, stating lawyers have duties of competence, communication, confidentiality, consent, candor to the court, and supervision all of which apply to the use of AI in the legal field. Chmielewski believes generative AI has stirred the most controversy within the legal industry. Judge Benitez added that the duty of confidentiality poses problems with AI because lawyers cannot put confidential information into generative AI which could identify clients. Thus, it is necessary for lawyers to work with security professionals to protect the client’s confidentiality.
Panelists then discussed how AI may positively assist with document review for large mass tort cases, where there can be thousands of documents to sift through. The panel recognized AI’s potential to sort meritorious and non-meritorious claims in a mass tort suit. However, the panel noted the use of AI will not solve sloppy lawyering, despite its potential to provide expedition to “slower” parts of the legal process. Sletlod remarked that while there is a lot of generative AI in the legal field, the legal field is a ways away from inputting information into a program and having it output a deposition outline. Copeland described AI’s ability to assist with manual review tasks, such as flagging documents. Sletlod emphasized that lawyers are crucial for training AI to improve its review and organization capabilities.
Judge Benitez raised the issue of copyright for generative AI, specifically whether something AI-generated can be copyrighted. The question turns on whether a lawyer’s work product includes documents only reviewed, rather than drafted, by a lawyer. One interesting point raised by Chmielewski was whether a lawyer would be incompetent by not making use of the technology. Panelists agreed that a lawyer need not be an expert in the use of AI, but should be aware of it and be able to work within the space without being “lost”.
Copeland introduced additional uses for AI that could have positive effects on the legal field, including using AI in focus groups, selecting jurors, trying concepts to determine the best jurors for a case, and determining which expert to hire. AI can both save costs and be effective. D’Aquilla added that generative AI could save additional costs when analyzing medical records.
Towards the end of the panel, an audience member asked how the use of generative AI will look in the field, to which D’Aquilla and Sletlod answered that lawyers need to train AI to refine searches and accept or reject what AI has provided.
Chmielewski noted aspects of generative AI used in platforms like Zoom, such as transcribing and sending summaries to meeting participants. However, Judge Benitez said having a human “in the loop” is still necessary to review and verify all content produced by AI.
The final question posed to the panel was how to keep lawyers from using AI and being lazy about it. Judge Benitez said this issue is not unlike something that the legal field has already seen. Before AI, it was not unusual for young lawyers to cut and paste something they previously did without reviewing what was being submitted. In his experience, he has not held lawyers in contempt for these errors, but other judges have required lawyers provide an IRAC analysis of issues. Copeland said another way to avoid sloppy lawyering with AI is to impose monetary fines or refer the offending attorney to the State Bar for suspension. Chmielewski compared AI to having a legal consultant provide an attorney with a brief, something which is not an excuse for the lawyer’s lack of review before filing. An audience member shared an instance where a lawyer had to write apology letters for incorrectly cited cases, and the lesson that a brilliant tool like Chat GPT cannot be fully trusted. Finally, Sletlod suggested the people with “big hammers,” like judges, should be the ones to ensure lawyers are following the rules.
RECUSALS, MOTIONS TO DISQUALIFY, MANDAMUS AND THE RELATED PROFESSIONALISM ISSUES
March 14, 2024 at 11:30 a.m.
Moderators:
Richard Arsenault, Neblett Beard & Arsenault
Erin Copeland, Fibich Leebron Copeland & Briggs
Panelists:
Sejal Brahmbhatt, Williams Hart & Boundas
Andy Childers, Levin Papantonio Rafferty
Robert J. Drakulich, The Drakulich Firm
Rachel Lanier, The Lanier Law Firm
Authored by Samantha Webster
Moderated by Erin Copeland and Richard Arsenault, this panel provided perspectives from the plaintiffs’ bar on mass tort litigation and focused on ethics and professionalism issues through the lenses of the Johnson & Johnson talc litigation, opioid litigation, and the 3M double sided earpiece litigation. Panelists Sejal Brahmbhatt, Andy Childers, Robert Drakulich, and Rachel Lanier all have extensive experience in the mass torts field.
Lanier provided background information on the Johnson & Johnson talc litigation. The case alleged Johnson & Johnson’s talcum powder caused ovarian cancer and mesothelioma in twenty-two women because of asbestos found in the powder. Facing thousands of cases, Johnson & Johnson opted to consolidate its liabilities into a new company and have that company file for bankruptcy. Johnson & Johnson, however, was disrespectful and unprofessional in the litigation, making personal attacks on special masters working on the litigation. Hodges added that the neutral in the case, Randi Ellis, was accused of not being neutral. Ellis had dinner with one side in the litigation despite her duty to have conversations with each side and represent the court in pushing towards resolution. Questions arose from her actions, including whether dinner with law firms is appropriate and whether courts should have more involvement with these processes. Drakulich suggested Johnson & Johnson’s actions were defense
tactics to remove the case from bankruptcy court, and believes Ellis was being treated like an advocate when she was a neutral. Ultimately Ellis was challenged and a motion to disqualify her was filed based on her having dinner with defense counsel. She was then dismissed without a hearing.
Lanier highlighted the reality of litigation and explained how people play dirty on both sides. She acknowledged that it is one thing to be an aggressive advocate for your client and seek recusal, but attacks cannot be personal nor lack a basis. Brahmbhatt drew comparisons to Beasly Allen, where there were also personal attacks and no factual basis for the allegations against the attacker’s credibility. It is difficult to know where to draw the line between being transparent and protecting reputation. It is not worth your reputation to shoot yourself in the foot.
Copeland characterized these antics as a “sideshow,” taking away from the litigation at hand. Copeland cited an article Ellis wrote for Law360 stating “practicing law is a profession, not a locker room brawl,” honing in on the importance of fighting for merits of a claim and not something else. Lanier added that attacking the person rather than an argument is a logical fallacy; she had a case that went to the Supreme Court in which one of the justices recused themselves for owning stock in a subsidiary in a company her firm sued, which was handled appropriately. She added that in more adversarial cases, some attorneys write briefs to personally attack people rather than engaging in thorough legal research to make the substantive argument.
Copeland then moved the conversation to the ongoing opioid litigation, which targeted lawyers. Drakulich provided the background information, explaining how defendant distributors thought the special counsel was taking advantage of his position and access to information. Drakulich explained that if the special counsel has a duty of confidence, he cannot continue representation. There must be a material disadvantage to his information access and merely seeing the documents was not such a disadvantage.
Copeland then addressed efforts to disqualify special master David Cohen in the opioid MDL, which further delayed resolution of the legal claims. Drakulich stated that
Cohen wrote two notes and sent them to everyone in the litigation, communicating he was impartial as the special master. However, Copeland explained allegations arose suggesting Cohen purposely sent the email, prompting the parties to seek his disqualification for impartiality. Brahmbhatt noted that disqualification efforts only serve to prolong litigation and burden the court’s time. Lanier echoed this sentiment, stating the attacks on Special Master Cohen wasted the court’s time. Lanier explained Special Master Cohen was well-known in the field and the judge should have called balls and strikes. Lanier also suggested that targeting Special Master Cohen was a tactic to delegitimize the case itself, making it unclear who these tactics benefit. Copeland agreed, stating that these tactics hurt the clients the most. Copeland then posed a question on managing duties to clients when the case is not moving and is barraged by these time-consuming attacks. Brahmbhatt suggested sending status letters to clients explaining the case’s stall due to another firm. Truth and communication should be used to a lawyer’s advantage so clients do not find out about updates in the news. Finally, Lanier highlighted the necessity of candor to the court when dealing with meritless delays caused by other counsel.
Next, Copeland switched gears to discuss the final topic of the panel, judicial intimidation, which is exemplified by the 3M earplug manufacturing case. Lanier introduced the litigation, which centered around 3M manufacturing of double-sided earplugs used in the Iraq and Afghanistan wars. These earplugs were being sold to the U.S. government when a small California company also started making the earplugs. 3M sued the small California company, and it was revealed that 3M’s earplugs did not protect from hearing loss and tinnitus. Consequently, plaintiff’s lawyers sued on behalf of those injured by 3M’s earplugs. Judge Casey Roberts took these cases; she was viewed as conservative, but this did not cause any issues with either the plaintiffs or defense. Judge Roberts was a veteran and a professional and would have recuse herself if needed. When cases approached resolution, 3M became discontented with the Bellwether results favoring the plaintiffs and the high number of settlements.
Lanier explained that Arrow, a subsidiary that helped 3M manufacture the earplugs, also filed for bankruptcy as a strategic move. 3M immediately filed for bankruptcy, an unprofessional move considering they had events on the calendar. Judge Roberts sanctioned 3M for this conduct, stating it was a form of litigation abuse. Subsequently, 3M made efforts to undercut Judge Roberts publicly, despite her neutral and professional decisions. Brahmbhatt concurred that Judge Roberts’ decisions were based on the evidence.
The panel then took a question from the audience which brought up Former President Trump vilifying judges and asked how far judges will go to let lawyers get away with bad behavior towards them. Copeland referenced an article which stated “vitriol is part of the job” for judges. In the article, the judge received eleven death threats for her position of power. Copeland said attorneys do not do enough to counter aggressive verbiage. Lanier stated lawyers should not warp the judicial system because they are the last line of defense to legally right a wrong. Copeland drew a comparison to a case where Sherwin Williams was sued for lead paint; while plaintiffs had some success, defendants pushed to disqualify the judge. Drakulich noted similar actions by defendants in other cases.
EXIT STRATEGIES, RESOLUTION OPTIONS, DEALING WITH THE “TAIL” AND THE FEE DISGORGEMENT RISK
March 14, 2024 at 12:30 p.m.
Moderators:
Richard Arsenault, Neblett Beard & Arsenault
Erin Copeland, Fibich Leebron Copeland & Briggs
Panelists:
Hon. Gail A. Andler (Ret.), JAMS Mediator and Arbitrator
Timothy Becker, Johnson Becker
Gary Goldberg, Archer Systems
Brooke Hodge, EisnerAmper
Trent Miracle, Flint Cooper
Authored by Roya Hassas and Averi Aburto
On the final day of the Class Action Law Forum, a diverse group of panelists familiar with the post-judgment and settlement process of mass tort resolution discussed issues related to the “tail-end.” Moderated by Richard Arsenault and Erin Copeland, this panel featured Timothy Becker, Flint Cooper, Gary Goldberg, and the Honorable Judge Gail A. Andler. Judge Andler provided insight from her experience as both a former judge for the Orange County Superior Court and a current Judicial Arbitration and Mediation Services, Inc. (“JAMS”) mediator and arbitrator. The panel encompassed a variety of topics concerning the resolution of mass torts and associated class action issues. These included discussions with opposing counsel, the role of special masters, judicial oversight and settlement subcommittees, the importance of data analysis as a resolution tool, the allocation process, different types of settlements, mechanisms for ways defendants may seek finality in a case, and fee disgorgement.
The panel began by discussing when it is appropriate is for plaintiff’s counsel to consider the resolution of claims. Becker emphasized the importance of early estimation of claim value to facilitate constructive conversations with opposing counsel. He discussed how attorneys should analyze different plaintiffs’ injuries which may lead to differing subgroups of plaintiffs to be compensated according to their injuries. In cases
with varying injuries, Becker finds it important to speak with the defendant as soon as they are willing to begin discussions. Becker also highlighted a growing judicial inclination toward promoting dialogue among litigants, citing a case where a judge appointed a settlement committee and ordered the parties to speak to one another. This proactive approach fostered familiarity among parties, facilitating a swift and equitable settlement and representing a testament to the efficacy of settlement conferences in achieving fair resolutions.
Miracle then elaborated on his strategic approach during the initial stage of a case, envisioning a successful resolution and creating a plan to reverse engineer how to reach that result. He stressed that on the plaintiff’s side, “you don’t know what you don’t know,” explaining it is important to discuss with opposing counsel as soon as possible to shed light on any preconceived notions. Judge Andler echoed her appreciation of early discussion to foster cooperation. She advocated bringing parties together as soon as possible, which she finds leads to fewer disputes.
The panel subsequently delved into the roles of special masters, judicial oversight, and settlement subcommittees in resolving claims. Judge Andler explained a special master works as a court-appointed neutral party. Special masters can be brought in at various points in litigation and can help determine how fees will be allocated or create the master settlement agreement. She noted parties may also mutually agree to appoint a special master themselves. In cases involving a special master, judges typically maintain a hands-off approach, intervening only to receive updates on the progress of discussions. Becker added that active involvement from special masters and/or judges in litigation is highly beneficial because they encourage parties’ efforts toward resolving claims. He favors settlement committees because an outside perspective between the parties is helpful to reach resolution.
Goldberg then shed light on the importance of early data analysis as a resolution tool. He stated there has been a pivot toward using data to set the parameters for lien resolution and settlements, especially with large mass tort cases. Portals have been
utilized to gather immense amounts of information about the claimant population. Data collection can help visualize demographic trends among claimants and the subcategories of injuries among them. He believes this data trend is valuable and can help with the settlement process.
The panel then discussed the allocation process once claims have settled. Judge Andler explained an equitably apportioned settlement can involve a claims administrator who makes determinations about the settlement and base allocation attorneys who assign “points” to plaintiffs based on their injuries and propose plaintiffs entitled to access to an extraordinary injury fund. Additionally, settlement allocation may include a court-appointed neutral to review claimant fact sheets, medical records, statements of claimants, and conduct interviews with claimants to determine the money claimants receive from the set aside reserve.
The panel then delved into the difference between global settlements and inventory settlements. Global settlements encompass the entirety of the case, while inventory settlements focus on resolving claims only for the client the attorney represents. Becker highlighted the advantage of inventory settlements: because defendants have an incentive to settle with those with the highest claims, this makes the downstream effect of settling remaining claims easier. Miracle pointed out the evolution of settlement practices, noting that twenty years ago valuing individual claims through formulas was more straightforward. Now it is much harder to value individual claims, so inventory settlements seem to be less common. Instead, broad gross settlements are prevalent, which can take one to two years to determine the settlement allocation.
The next topic focused on defendants seeking finality in their cases. Becker stated when a defendant assesses risk, they are seeking to “buy-finality.” When class claimants have an opportunity to opt-out, the defendant may give a threshold of opt-outs, that if met, may mean the defendant is unwilling to settle. Becker additionally explained the ongoing risk posed by some clients who want their day in court and refuse to participate in settlements. Goldberg added that the allocation process is designed to incentivize
claimant participation. Becker continued, explaining defendants’ potential recourse to bankruptcy rather than settlement when they do not see a potential for finality. He suggested bankruptcy courts may offer a more efficient allocation process because the judge will typically value the claim and create a grid for claimants to plug their injuries into. However, Becker cautioned going through bankruptcy court may grossly undervalue claimants’ injuries.
The last topic discussed was attorney fee disgorgement. Copeland recommended attorneys engaged in aggregate settlements with fee allocations and have an ethics specialist to assist with the fee disclosure. The fee disclosure explains all allocations given to class counsel and is required to be sent to all plaintiffs. Copeland warned an attorney’s failure to disclose the entirety of their fees could result in fee disgorgement. She mentioned the Texas case Arce v. Burrow, which held that if one claimant adequately proves lack of disclosure, then all fees may be disgorged.