The complexity and importance of the risk-reward dynamic elevates significantly in the context of class actions. Once a class is certified, the risk assessment of inside and outside counsel focuses on the size of the class, the potential money damages, the strength of the client’s merits and class case, and the impact of trial on the client’s business. Inside counsel will often find it exceptionally challenging to discern, or build, a consensus among the corporation’s stakeholders when classwide exposure, liability, and relief are at issue. Once trial cost and risk assessments have been done, inside and outside counsel must decide whether and how to structure a resolution, short of trial, that addresses the issues certified in a manner best suited for the defendant and the members of the class. That partnership of discussion and analysis has historically resulted in most certified national class actions being settled before trial, although sometimes with a “claims resolution” process that requires a degree of “merits” presentation from class members. As one class action attorney put it, “[i]t is probably safe to say that more lawyers have seen a double rainbow or climbed Mt. Everest than have tried a class action case.” An exaggeration, perhaps, but it amply illustrates the effect such high-stakes litigation has on even the most optimistic of attorneys.
That said, evolving class action law has started to limit the types and amount of damages available in a class action, making the prospect of trying a class action potentially less daunting. In addition, as a class action proceeds through litigation, the landscape can and usually does change; perhaps statutory claims are dismissed or the alleged conduct triggering the claim for punitive damages is no longer part of plaintiffs’ claims. Sometimes plaintiffs make an assertion in a motion or before the court that supports the substance of a specific claim, but contradicts their class certification theory. Inside counsel and trial counsel should always revisit the client’s risk management plan concerning its willingness to try a class action with any change in the status or character of the case.
Moreover, trial can, and should, be viewed as another bite at the certification apple. Class certification remains within the discretion of the trial court. Any demonstration on the record, even after certification of a class, that plaintiffs cannot prove claims on a classwide basis can always make a difference. Decertification should always be a goal.Trial counsel should remind inside counsel of the many opportunities at trial defendants have to reiterate to the court why the case should never have been certified.Trial is also an opportunity to neutralize the effect of class certification by demonstrating to a jury that, irrespective of the merits of the named plaintiff’s claims, that person’s experience is inherently individualized and cannot be attributed to the remainder of an unseen, unheard from class.
It is important for trial counsel to plan a strategy with inside counsel that assumes there will be a trial. Far too often, we have seen defense firms that assume the class certification fight will end the battle—at times leaving the client with no choice but to settle if the class is certified. Finally, preparing to go to trial does more than prepare trial counsel to try a class action, it keeps pressure on both parties. A demonstrated willingness to try a class action can effectively motivate plaintiffs to come to the table, ready to truly negotiate in good faith. Of course, a show of willingness must reflect actual willingness, so inside and outside counsel must be prepared to try the case in the event negotiations fail.