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Probing Class Representatives for Ties to Class Counsel

A developing defense trend in class action litigation involves defense firms and, at their urging, courts looking more closely for pre-existing relationships between class action plaintiffs and their lawyers, including searches for plaintiffs who have been "improperly" solicited. Defendants tend to believe that it is difficult to find a "clean class representative", especially after class action guru-turned-felon William Lerach commented earlier this year that illegal kickbacks were widespread among all class action lawyers.

Last year, in Bodner v. Oreck Direct, LLC (N.D. Cal. 2007) 2007 U.S. Dist. LEXIS 30408, 2007 WL 1223777 (Case No. 3:06-cv-04756-MHP) Judge Marilyn Hall Patel denied a motion to certify a class of more than 75,000 buyers of air purifiers from Oreck Direct because the plaintiff knew little about the case and had simply answered an ad in the San Francisco Bay Guardian looking for plaintiffs.

"The conduct in this action does not look good, does not sound good, and does not smell good. In fact, it reeks ... In light of plaintiff's undeniable and overwhelming ignorance regarding the nature of this action, the facts alleged, and the theories of relief against defendant, the court cannot conclude that he has met the threshold typicality or adequacy requirements. ... It is clear from the record that plaintiff's counsel, and not plaintiff, is the driving force behind this action."

The record reflects that the plaintiff filed a motion for reconsideration, but nothing on PACER suggests whether the court has ruled on that motion. Curiously, the Bodner opinion relied upon a 1996 New York case that is in conflict with California law. Meachum v. Outdoor World Corp. (1996) 654 N.Y.S.2d 240, 369 (“Solicitation of clients for the commencement or continuation of a class action is improper, sufficient to warrant denial of class action certification.”); cf La Sala v. American Sav. & Loan Assn (1971) 5 Cal.3d 864 (plaintiff who is no longer a member of the class generally must be granted leave to amend the definition of the class and/or to substitute a new class representative to preserve the claims of putative class members.) Bodner is not citeable in federal court, and in state court, it's effect is devastated by a citation to La Sala.

But in most wage and hour class actions, this whole problem is non-existent. Some consumer class actions begin with advertisements, and some securities class actions apparently begin with offers of kickbacks by crooked lawyers, but most wage and hour class actions start the same way: by recently terminated employees calling attorneys to find out if they have a good wrongful termination case. Sooner or later, the conversations turn to wage and hour violations, and frequently, those discussions uncover one or more widespread violations. (see, e.g., Storm's California Employment Law: "in any intake situation involving an employee, the attorneys quickly turn to wage and hour topics, no matter what the conversation starts with.").

Those conversations, of course, are privileged. We recently had a defendant attempt to find out how our client had learned of the wage and hour violations and how he came to become a class representative. After establishing that, of the client's own volition, he had contacted our firm to ascertain his rights concerning his employment relationship, the scope of non-privileged inquiry ground to a halt. The ambush doesn't work so well in wage and hour cases that begin with client-driven inquiries, rather than lawyer-driven case development.

Comments

La Sala is hardly the end of the story. The recent CashCall decision essentially endorses the theory that a court retains jursidiction over a class, even when the lead plaintiff implodes, and even (as in CashCall) when the lead plaintiff lacked standing at the outset.

In a consumer class action I am currently handling, the lead plainitff couldn't take the pressure of subpoenas to his relatives and other delightful conduct. He asked to withdraw. The court granted leave to issue a notice to a sample subset of class members, advising them about the action and that it would be dismissed if noone stepped forward to participate.

Given that such a notice is authorized (or nearly mandated under a trial court's duty to protect the class), it makes almost no sense to say that the attorney can't initiate a communication. The notice is an attorney-initiated communication. It's sophistry to say that the recipient of the notice has to then contact the lawyer and that makes everything fine.

Yes, it's bad to pay plaintiffs. Yes, it's unethical to promise to share fees to get a class client. We know this. The Milberg debacle is headline-grabbing, but it isn't common practice, especially in the field of wage & hour class actions.

Of late I notice that, at the trial court level, personal bias is tainting the adjudication of class actions. The certification standards are being repeated in a fairly consistent manner at the appellate level. The trial courts need to accept those opinions and rule accordingly. Of course, the abuse of discretion standard is a license to take license.

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