What Happens When Many Class Actions Are Filed About the Same Thing? Part I - before the case is set


One question that many people have about class actions is what happens when more than one class action is filed challenging the same issue. Indeed, with companies sometimes harming consumers on a nationwide basis, what is to stop a consumer in California from suing a company for a policy that also affects the company's customers in Georgia? Can both consumers file nationwide class actions? What if there are dozens or hundreds of cases?

The short answer is yes, both cases, or dozens or hundreds of cases can be filed—in

either state court or, if a federal law has been violated or more than $5 million is

collectively at issue, in federal court. Indeed, similar cases are often filed in different state

or federal courts across the United States. The answer to the question about how they are

treated boils down to one of strategy and the number of cases filed.

If many cases are filed they’ll likely be centralized by the JPML

If many1 cases are filed in federal court, any of the lawyers on any of those cases can

file a motion with the Judicial Panel on Multidistrict Litigation (called the “JPML” or the

“Panel”) The Panel is a traveling court that meets about 5 times a year (to file one, just

follow the directions available at http://www.jpml.uscourts.gov/rules-procedures.) The

motion basically asks the Panel to centralize the various federal cases that have been filed

by sending all of them to a single judge for coordinated pre-trial proceedings (most

importantly for motion practice, discovery, class certification, and settlement negotiation).

In the motion, the party seeking centralization tells the JPML why centralization would

make sense under the facts and which federal judge/court the case should be sent to. These

motions often feature arguments about the relative caseload the proposed courts are

presently shouldering, the amount of work done already by any of the various judges, how

the cases are similar, and the proposed location’s convenience to parties and witnesses.

Lawyers with cases listed in the proposed MDL can file opposition papers, either opposing

centralization entirely, asking for their case to be excluded, or ask, if the cases are

centralized, that they are sent to a different jurisdiction belived to be more convenient.

Take the recent Anthem data breach litigation, for example. In just the first few

weeks it appears that already over 100 class action cases have been filed in federal and

state courts all across the country, each of them purporting to be on behalf of everyone in

the United States whose data was compromised as a result of Anthem’s shoddy security

practices. A motion to centralize the cases was filed with the JMPL on March 3, 2015 and

many responses/oppositions and other filings have been submitted in response. The

motion is up for hearing when the Panel next sits on March 28, 2015 in San Diego, CA.

The JMPL process only applies to federal class actions, however. State court class

actions that the defendant is unable to remove to federal court will stay in State court and

may proceed simultaneously with any federal action. In practice, lawyers may file cases in

state court hoping to keep them in order to provide an alternative venue for reaching a

settlement.

After a case is centralized by the JMPL—like the Anthem case is almost certain to

be—the cases are transferred to the Court selected by the Panel. Once there, almost no time

is wasted before groups of lawyers begin filing motions with the Court to be appointed lead

counsel. As we’ll detail in a future post, lead counsel is a critical role, as that is the attorney

(or group of attorneys) who determine issues such as the pleadings, discovery, litigation

strategy, and settlement (including the distribution of any attorneys’ fees that are

ultimately awarded). If enough cases have been filed, the leadership structure may include

sub-categories with titles like “liaison counsel” and “Steering Committee”— which basically

comprise firms that supported the lawyers who are acting as lead counsel and who are

likely to be awarded some work on the case.

Additionally, at least in class actions (as opposed to mass actions, like prescription

drug cases or product defect cases that result in physical injuries—think pelvic mesh)

following centralization the cases are often consolidated. That is, a single complaint is filed

combining all the named plaintiffs’ claims and the action proceeds as one case. Again this is

distinct from mass tort cases which remain separate, even if an MDL centralizes them for

pre-trial proceedings. At the close of those MDLs, the cases may be sent back (remanded) to

their original courts for separate trials. That almost never happens with respect to

centralized class actions.

Generally speaking, once a case is centralized and lead counsel has been appointed,

the parties either litigate, attempt in earnest to settle, or some combination of the two.

If only a few cases have been filed, centralization is likely unnecessary—transferring

the cases or simply proceeding separately (with or without an agreement to act

cooperatively) often present viable alternatives.

If only a few cases have been filed, then it is less likely that the JPML will see a need

to centralize them. This may result in no party moving for an MDL in the first place. Rather,

the lawyers for the different plaintiffs (to the extent they’re not already working with each

other) will discuss whether the cases may be transferred or, as allowed by the local rules of

many jurisdictions with respect to case filed in the same district, deemed related. Plaintiff’s

counsel can discuss ways to reduce overall costs by sharing information, entering into

cross-use agreements, and dividing up some of the depositions.

Potential Pitfall: beware the reverse auction

One of the most important thing to watch out for when multiple cases are filed is

something known as the “reverse auction.” This occurs when the defendant that has been

sued approaches one group of lawyers and starts settlement negotiations. Once the

defendant gets a feel for the type of deal those lawyers are willing to provide, the defendant

goes to another group of plaintiffs’ lawyers to see if they will be provide something

better—playing the two (or sometimes three) groups off of themselves to give the

defendant the cheapest settlement it can get (the one that requires it to pay the class the

lowest amount of money). For this reason it is important that lawyers who are negotiating

with a defendant on behalf of a class ensure the defendant is not negotiating with any other

group of lawyers.

This sums up what happens before the case is actually settled. In Part II, we’ll review

what happens among the various groups of lawyers once a settlement has actually been

reached and publicly announced. Stay tuned.

1 The number needed for centralization varies on a case-by-case basis. “Many” connotes

that usually more than two or three cases are needed before the JPML will grant

centralization, but MDLs consisting of 4 – 10 cases are approved fairly regularly.


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