Points for Participation: Class Members Increasingly Active

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By Perry Cooper

Volkswagen diesel owners call class counsel on their cellphones. They barrage the court with e-mails. They engage in Twitter discussions.

They aren’t content to wait passively while their claims are settled through the “Clean Diesel” litigation in the U.S. District Court for the Northern District of California.

This is the new normal for high-profile, big-dollar class litigation, Samuel Issacharoff told Bloomberg BNA recently. He’s a civil procedure professor at New York University Law School in New York who is working on a law review article on the topic.

Issacharoff has seen this kind of increased class member participation in several other recent cases such as the litigation over the Deepwater Horizon spill and the National Football League concussion suits.

He says the increased participation is good for the legitimacy of the class action system, even if it causes a few headaches for attorneys.

Issacharoff said the trend could spread to lower-profile, smaller-dollar suits as well.

That possibility, according to one federal judge who’s presided over a number of class actions, could help counter arguments from both defense counsel and prominent fellow jurists that too many class suits are driven by attorneys seeking fees.

‘Complete Revolution.’

Elizabeth Cabraser, lead counsel in the VW litigation, said she’s seeing a “complete revolution in the relationships between members of the class, their counsel and the court” in high-profile class suits like the diesel emissions cases. Cabraser is a partner at Lieff Cabraser Heimann & Bernstein LLP in San Francisco.

There used to be a clear dividing line between cases where one lawyer represented one client, and class litigation, “where someone famously, but inaccurately, boasted that the great thing about class actions was there were no clients,” she said recently at a conference hosted by NYU Law.

She remembers a time when class counsel might communicate with members of the class twice—if they were lucky—over the life cycle of a case: once after the class was certified and once after it was settled. Communication “was an expensive proposition,” she said.

“We are in a completely different situation today and that process has accelerated so quickly that many of us don’t fully even realize yet where we are,” she said.

Easier Communication. More MDLs

Issacharoff attributes the trend to two changes. First, the means of communication have changed dramatically. “There’s not a major event that doesn’t prompt a Facebook gathering, Twitter feeds, every kind of social media imaginable,” he said.

Second, most of the significant class actions today are organized around multidistrict litigation.

That means “that in the first instance you already have aggregation even without the class action mechanism,” he said. “The class action is a way of resolving it but it’s not the first step taken to aggregate or collectivize the proceedings.”

He used the NFL concussion litigation as an example. It began with hundreds of suits filed all over the country that were consolidated in the Eastern District of Pennsylvania under Judge Anita B. Brody. The class mechanism was introduced afterwards as a way to resolve all the suits.

“We have this image of class actions as headless entities—lawyers without clients and stuff like that,” Issacharoff said. But, in the NFL litigation, hundreds of lawsuits were already underway, which meant when the class action was organized, the individuals in the class already had their own lawyers.

“By the time you get to the class settlement, the old image that we have that these are anonymous, non-participating individuals, gives way to a very active block of participation,” he said.

No More Rational Indifference

Class members were traditionally thought of as “rationally indifferent” to the ins and outs of litigation, Cabraser said. They let it proceed without them, and collected their checks after settlement.

“Nobody is rationally indifferent to anything anymore,” she said. “Or perhaps no one is rational about anything anymore.”

She said she and other class attorneys are now “barraged with communications” in the suits with big potential payouts for class members. VW class members e-mail class counsel constantly, even call their cell phones. “There is 24/7 real time participation.”

Class members don’t just bug class counsel, they even e-mail the courts.

Judge John Koeltl of the U.S. District Court for the Southern District of New York sheepishly asked Cabraser at the NYU conference, “Should judges respond to those e-mails?”

Cabraser assured him they should not. Class notice documents tell class members not to contact the court directly. Instead, courts should forward communciations from class members to the attorneys involved in the case.

In the VW and NFL cases, the courts forward batches of e-mails to the attorneys daily, Issacharoff said.

“You have to have new procedures in place,” he said.

He noted that Cabraser makes a point of personally answering every e-mail from a VW class member. And Chris Seeger, lead plaintiffs’ lawyer in the NFL settlement, holds a weekly call with class members to let players, or their wives, check in on progress or raise concerns, Issarcharoff said. Seeger is a partner at Seeger Weiss LLP in New York.

Anomaly, or Harbinger?

Cabraser said at first she thought the level of class member involvement in the VW litigation was an anomaly. A car is one of the most expensive purchases many Americans make, and VW diesel buyers were informed buyers who thought they were making a eco-conscious choice. It’s no surprise they followed the litigation closely.

But Cabraser said, “I am not so sure now it’s an anomaly, I am more sure now that it’s a harbinger of things to come.”

The high participation rates reflect not just the specific demographics of VW class members, but also reflect “the fact that we all feel the right now to participate in what used to be more formal affairs—elections, for example, and court proceedings,” she said.

“We now all feel the right to participate far more directly, and sometimes far less civilly than we ever did before,” she said.

Issarcharoff expects that the trend will spread even to class actions involving low-value consumer claims. Even if the level of participation isn’t as high for a $3 per class member settlement over misadvertised batteries, class members will be aware of the case.

“You no longer get class actions that nobody has heard of,” Issacharoff said. “What you get is class actions that people may not care about. That’s a different set of issues.”

Increased Efficiency, Legitimacy

This kind of increased participation is good for the class action system, Issacharoff argues. “It has the best of both worlds—the efficiency of a collective resolution and the lower cost; and the legitimacy of people actually feeling that they are represented.”

Judge Robert Dow of the U.S. District Court for the Northern District of Illinois agreed.

This trend “should make people feel good about Rule 23 and the class action process,” he said at the NYU conference.

Dow referred to Fed. R. Civ. P. 23, which governs class actions. He serves on the subcommittee tasked with revising the rule.

“If you read Judge Posner’s decisions, a lot of what concerns him is all these absent class members are led around by the nose by lawyers that want to make a lot of money,” Dow said.

He referred to opinions by Judge Richard A. Posner of the U.S. Court of Appeals for the Seventh Circuit. Posner is often skeptical of class settlements, which he warns can be lawyer-driven.

For example, he skewered the attorneys in a settlement over leaky windows, charging class counsel with “selling out the class” for higher attorneys’ fees, in Eubank v. Pella Corp., 753 F.3d 718 (7th Cir. 2014).

If class members are more involved, Dow’s line of reasoning goes, there should be less room for abuse of the system.

Dow also hopes that media coverage of efficient processes like the VW litigation will help the public “understand the good parts of Rule 23.”.

“Too often what people see in the papers is the coupon settlement, or the ridiculous sum of money paid for something that doesn’t look to the public like an important problem or the fact that the average person gets a check for 18 cents,” he said.

New Reality

More participation will also affect defendants’ calculus in settling cases, Issarcharoff said.

“It shines a light on the settlement process,” he said. “It’s an ongoing process of review and that means that you can’t craft a settlement in the darkness and hope that with a little bit extra in attorneys’ fees or something like that you make the whole thing go away.”

Cabraser said the challenge for everyone involved in the class action world is to accept that the system is forever changed.

“Anything we thought we knew or read in a case five years ago, two years ago or even earlier this year may well no longer be true,” she said. “One thing I’m certain of is that class actions will be increasingly characterized by incessant communication between class counsel and class members, perhaps between the defendants and class members, and like it or not, between courts and class members.”

To contact the reporter on this story: Perry Cooper in Washington at pcooper@bna.com

To contact the editor responsible for this story: Steven Patrick at spatrick@bna.com

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