Presenting a live 90-minute webinar with interactive Q&A Consumer Class Action Settlements: Evaluating, Negotiating and Structuring Settlements Pre- and Post-Certification Weighing Settlement Options, Negotiating the Agreement, Obtaining Court Approval TUESDAY, JANUARY 19, 2016 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific Today’s faculty features: Donald R. Frederico, Partner, Pierce Atwood , Boston Neal R. Marder, Partner, Winston & Strawn , Los Angeles Adam M. Moskowitz, Partner, Kozyak Tropin & Throckmorton , Miami The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10 .
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Consumer Class Action Settlements: Settlement Options and Class Notice Presented by Neal R. Marder, Winston & Strawn LLP January 19, 2016
Weighing the settlement options: Individual vs. class-wide settlements
Weighing the settlement options • Individual settlements with named plaintiffs • “ Picking off” named plaintiffs prior to class certification • The federal courts of appeal are divided as to whether a Rule 68 offer of judgment or settlement offer that would provide complete relief to the plaintiff – even if rejected by the plaintiff – moots the plaintiff’s claims . 7
Weighing the settlement options • Most circuits have held that a defendant's offer of judgment that would fully resolve the plaintiff’s claims therefore moots the plaintiff’s claims. • Weiss v. Regal Collections , 385 F.3d 337 (3d Cir. 2004) • Krim v. pcOrder.com, Inc. , 402 F.3d 489 (5th Cir. 2005) • Thorogood v. Sears, Roebuck and Co. , 595 F.3d 750 (7th Cir. 2010) • Lucero v. Bureau of Collection Recovery, Inc. , 639 F.3d 1239 (10th Cir. 2011) 8
Weighing the settlement options • Several circuits have held that an offer of judgment will not moot the class action if made after a motion for class certification has been filed. • E.g. , Zeidman v. J. Ray McDermott & Co., Inc. , 651 F.2d 1030, 1051 (5th Cir. 1981) • This approach encourages plaintiffs to file motions for class certifications with their complaint or shortly after filing. • Some courts have held that an offer of judgment will not moot the class action if made before the plaintiff has had a reasonable opportunity to move for class certification. • E.g. , Weiss v. Regal Collections , 385 F.3d 337 (3d Cir. 2004) 9
Weighing the settlement options • The Seventh Circuit has held that an offer of complete relief will moot the plaintiff’s case even if the plaintiff has not had an opportunity to move for class certification. • McMahon v. LVNV Funding, LLC , 744 F.3d 1010, 1018 (7th Cir. 2014) • The minority of circuits have held that a defendant’s unaccepted offer of judgment does not moot a class action. • Tanasi v. New Alliance Bank , 786 F.3d 195, 200 (2d Cir. 2015) • Diaz v. First American Home Buyers Protection Corp. , 732 F.3d 948 (9th Cir. 2013) 10
Genesis Healthcare Corp. v. Symczyk , 133 S.Ct. 1523 (2013) • Collective action under the Fair Labor Standards Act • Defendant made a settlement offer to plaintiff that would have fully satisfied the plaintiff’s claims • Court assumed, without deciding, that the unaccepted offer mooted the plaintiff’s claims • Once plaintiff’s individual claim became moot, her class claims became moot as well 11
Genesis Healthcare Corp. v. Symczyk , 133 S.Ct. 1523 (2013) • It is unclear whether Genesis , which involved a collective action under the FLSA, applies to class actions under Rule 23. • In her dissent in Genesis , Justice Kagan argued that the plaintiff’s claim was not mooted by the unaccepted offer. • Several recent circuit court decisions have followed Justice Kagan’s dissenting opinion. 12
Campbell-Ewald Co. v. Gomez (U.S. Supreme Court – argued Oct. 2015) • Campbell-Ewald, a marketing company, sent text messages to individuals on behalf of the U.S. Navy to assist in the Navy’s recruitment effort • One of the recipients, Jose Gomez, filed a putative class action under the Telephone Consumer Protection Act (TCPA) • TCPA provides for maximum statutory damages of $1,500 per violation • Campbell-Ewald served Gomez with a Rule 68 offer of judgment and a settlement offer for $1,501 13
Campbell-Ewald Co. v. Gomez (U.S. Supreme Court – argued Oct. 2015) • District court denied Campbell- Ewald’s motion to dismiss for lack of jurisdiction, holding that the unaccepted offer of judgment did not moot the case • Ninth Circuit affirmed • Case will be decided by the Court this Term 14
Strategic considerations • Plaintiffs’ lawyers may lose their fees • Classwide res judicata bar • Whether Plaintiffs’ counsel can find new plaintiffs 15
Communications with putative class representatives • Defendant's lawyers cannot engage in settlement discussions directly with the putative class representatives • Clients can communicate directly, but lawyers may not use their client as a conduit to transmit information to other party • ABA Model Rule 4.2 • California Rule of Professional Responsibility 2-100 16
Communications with putative class representatives (cont’d) • Whether a lawyer can provide to the client the basic terms of a proposed settlement agreement depends on the jurisdiction • For example, the ABA allows this • ABA Formal Ethics Opinion No. 11-461 (2011) • But California prohibits lawyers from preparing documents for the client to send to the other party • California State Bar Formal Opinion No. 1993 – 131 (1993) 17
Communications with putative class representatives (cont’d) • Example of successful client-to-client settlement strategy: • Myers v. MedQuist Inc. (D.N.J., settlement approved April 2009) • MedQuist was accused of overbilling its over 3,000 clients • MedQuist negotiated directly with major hospitals that were members of the putative class 18
The Business of Objecting to Class Action Settlements Adam Moskowitz, Kozyak Tropin & Throckmorton LLP January 19, 2016
Settlements are recognized as a compromise of ideals, and district courts are not tasked with determining whether a class action Courts review settlement offers optimal relief. class action “Settlement is the offspring of compromise; the question we address is not whether the final settlements product could be prettier, smarter or snazzier, but to determine whether it is fair, adequate and free from collusion. ” whether they Hanlon v. Chrysler Corp. , 150 F.3d at 1011, 1027 (9th are “fair, Cir. 1998) reasonable, “The trial court should not make a proponent of a proposed settlement justify each term of and settlement against a hypothetical or speculative adequate.” measure of what concessions might have been gained; inherent in compromise is a yielding of absolutes and an abandoning of highest hopes. ” Cotton v. Hinton , 559 F.2d 1326, 1330 (5th Cir. 1977) 20
Objectors challenge : Courts look at: Objectors The amount/type of The number of relief provided by the can provide objections and opt-outs settlement; as a percentage of the another The settlement total class; structure; The substance and merit check on a Sufficiency/clarity of of the objections; notice to class members; settlement’s The objectors’ Proposed fee-and-cost reputations and histories fairness award to Class Counsel; and potential ulterior motives for objecting. Any indicia of collusion between parties. 21
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