Prof. Klonoff: Climate for Class Plaintiffs Worsening

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By Perry Cooper

Oct. 16 — The class action climate for plaintiffs will continue to deteriorate over the next 10 years, but the class device will still be an integral part of the U.S. justice system, a professor who specializes in civil procedure predicts.

Robert H. Klonoff, professor at Lewis & Clark Law School in Portland, Ore., says in a forthcoming law review article that he expects that large and significant class actions will continue to be filed and certified, and that more class suits will be tried.

Klonoff is a member of the U.S. Judicial Conference Advisory Committee on Civil Rules' subcommittee on class actions, which is currently considering whether to make changes to the federal rule governing class actions, Fed. R. Civ. P. 23.

From that vantage point, Klonoff sees little chance Rule 23's basic structure will change. Academics have suggested sweeping changes to the rule's structure, but most judges and attorneys who work with the rule in the trenches seem to believe that the rule works reasonably well, he says.

General Decline

Although the number of class actions are generally on the decline, Klonoff predicts that securities fraud cases will buck this trend.

The U.S. Supreme Court hasn't shut down securities class actions, even though it's had many opportunities to do so in recent years, he says.

Securities suits are still thriving because they are highly suitable for class certification, according to Klonoff.

But consumer and employment class actions will become less frequent because of the increased use of arbitration clauses that bar class actions, he says. And recent Supreme Court decisions on arbitration leave plaintiffs few legal arguments to circumvent these agreements.

One bright spot for consumers could be upcoming action by the Consumer Financial Protection Bureau to prohibit or limit arbitration clauses in consumer finance agreements, he says.

Supreme Court Predictions

Klonoff makes some predictions about how the slate of class action cases before the U.S. Supreme Court this term will fare.

He expects the court will curtail efforts by plaintiffs to establish liability or damages through “trial by formula” in Tyson Foods Inc. v. Bouaphakeo, U.S., No. 14-1146, oral argument 11/10/15.

Tyson is a labor case challenging the class status of a group of pork plant workers. The plaintiffs' expert calculated the workers' average time putting on and taking off protective gear, despite the fact that actual donning and doffing time varied greatly among class members.

“The statistical study was clearly flawed in my view, because it erroneously assumed that all class members were the same as the average,” Klonoff says.

The Supreme Court will likely reject such use of statistical evidence for Fair Labor Standards Act collective actions, like the one in Tyson, as well as class actions brought under Rule 23.

But he expresses concern that the court will go further than rejecting the flawed statistics used by the Tyson plaintiffs, and “instead issue a broader opinion that would severely limit the use of statistical proof in a wide variety of class actions.”

Statistical proof is used in a variety of areas, he says, and shouldn't be rejected wholesale.

On the other hand, Klonoff sees Campbell-Ewald Co. v. Gomez, U.S., No. 14-857, argued 10/14/15, a suit over unsolicited text messages, as a win for class plaintiffs.

He predicts the court will refuse to hold in that case that an unaccepted offer of judgment to a class representative moots the individual's personal and class claims based on its recent decisions.

“Acceptance of [the defendant's] position would enable defendants in putative class actions to engage in gamesmanship by relying on unaccepted offers of judgment to derail putative class actions,” he says.

Ascertainability Teed up Next

Ascertainability is likely headed to the Supreme Court in light of the Seventh Circuit's recent decision in Mullins v. Direct Digital LLC, 2015 BL 240276, 7th Cir., No. 15-776, 7/28/15, Klonoff says.

There, the U.S. Court of Appeals for the Seventh Circuit rejected the Third Circuit's strict class membership test in a dietary supplement suit.

If the high court takes that case, Klonoff predicts that it will reject the ascertainability requirement.

Ascertainability, an implied prerequisite to class certification that has been read into Rule 23 by some courts, requires that the class be defined by objective criteria that allow ready identification of class members.

“I think the Court will be sympathetic to the argument that the requirement was invented out of whole cloth and the better way to address issues involving the identification of class members is through the superiority requirement, as Mullins reasoned,” he says.

Far More Class Trials

It has become conventional wisdom that class actions don't go to trial, they virtually always settle.

But a divergent trend has emerged in the last five years with many class actions going to trial in a wide variety of areas, Klonoff says.

There are several possible explanations, he says. First, the availability of interlocutory (immediate) review of class certification decisions under Rule 23(f) has put more class actions before federal appeals courts.

If the appeals court finds certification is appropriate, plaintiffs may make settlement demands the defendants deem unreasonable. Conversely, if an appeals court denies Rule 23(f) review, class counsel might be emboldened to demand a larger settlement. Both outcomes could increase the likelihood of trial, he says.

Both plaintiffs' and defense firms have begun touting their class action trial experience, and judges are becoming more comfortable trying class actions, he says.

He also notes that courts are more rigorously reviewing the fairness of class settlements. This review makes it more expensive for defendants to reach a settlement that can withstand appeal, so trial becomes a more viable alternative.

All of these explanations suggest the trend of more class trials will only accelerate, Klonoff says.

Klonoff is consulting editor of Bloomberg BNA's Class Action Litigation Report. His article, “Class Actions in the Year 2025: A Prognosis,” will appear in the Emory Law Journal.

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