For more than a year, a subcommittee of the Advisory Committee on Civil Rules has been soliciting and vetting ideas for amending Rule 23, the federal class action rule (see previous post here). These hardy souls (Judge Robert M. Dow, Professor Robert Klonoff, Elizabeth Cabraser and John Barkett) have criss-crossed the country, attending more than a dozen conferences to hear from practitioners across the spectrum. The Impact Fund’s 2015 Class Action conference in Berkeley was one of the subcommittee’s whistlestops.
Counsel negotiating a settlement on behalf of a class should start with class relief before any talk of attorneys’ fees, a plaintiffs’ attorney says. That will ensure that the attorney avoids “the most obvious and most serious of ethical allegations: that you have traded off class relief and fees,” Jocelyn Larkin, executive director of the Impact Fund, told webinar attendees Aug. 20.
Defendants often try to negotiate class settlements with one number, saying they don’t really care how it’s allocated, she said. “Resist negotiating along those lines.” Tell defendants early that you want to discuss class relief first, and only then talk about fees and incentive awards, she said. She suggested getting the mediator’s help in keeping the discussions separate if possible.
As Judge Posner famously put it, “the realistic alternative to a class action is not 17 million individual suits, but zero individual suits, as only a lunatic or a fanatic sues for $30.” In a nutshell, that’s what is at stake next term when the Supreme Court decides Spokeo v. Robins.
The plaintiff in Spokeo sued under the Fair Credit Reporting Act, alleging that Spokeo’s website contained false information about him. Spokeo is a self-described “people search engine” that organizes White Pages listings, public records, and social network information. Spokeo argued that the plaintiff lacked standing to sue because he did not suffer “actual harm” from the company’s conduct; his only claim of harm was that his statutory rights were violated. The Ninth Circuit disagreed, and held that where a statutory cause of action does not require proof of damages, a plaintiff can suffer a violation of the statutory right without suffering actual damages.
In a published opinion released yesterday, the Fifth Circuit ruled that an unaccepted offer of judgment to a named plaintiff moots neither the individual’s claim nor the putative class claims. Hooks v. Landmark Industries, No. 14-20496 (5th Cir. August 12, 2015). In so doing, it heeded Justice Kagan’s now-famous dissent in Genesis Healthcare v. Symczyk, 133 S. Ct. 1523, 1533 (2013) (Kagan, J., dissenting), in which she cautioned the Third Circuit to rethink its “mootness-by-unaccepted-offer theory” and noted to all other courts of appeals: “Don’t try this at home.”
To the relief of class action practitioners in the Seventh Circuit, the appeals court last week beat a hasty retreat on the issue of whether an unaccepted Rule 68 offer, made prior to a motion for class certification, could moot the individual claim of a class representative and therefore the class action. In an opinion authored by Judge Easterbrook, joined by Judges Posner and Manion, the Seventh Circuit explicitly overruled Damasco v. Clearwire Corp.