Data Breaches, Rule 23 Changes and Collegiality at Class Action Law Forum

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Class action litigation presents some of the judicial system’s most complicated cases, most elaborate proceedings and most challenging legal questions. Yet despite the adversarial nature of these high stakes matters, the field’s top practitioners, judges and administrators share a profound respect.

That mutual respect, along with a wealth of insights drawn from the front lines of major class litigation, was on full display at the 2020 Class Action Law Forum, presented by Western Alliance Bank, held March 4-5 at the University of San Diego School of Law and produced by HB Litigation Conferences.

Discussions covered the full spectrum of class action topics and issues, punctuated by riveting keynotes. In the first, prominent trial attorney Theodore J. Boutrous, Jr. provided an inside look at his work defending journalists and the First Amendment. On day two, renowned mediator Kenneth Feinberg spoke about his experience administering funds in the wake of multiple high-profile catastrophes, including the Sept. 11, 2001 attacks and the Deepwater Horizon oil spill.

Across that broad range of perspectives, practitioners from both the plaintiff’s and defense bar joined 12 sitting federal and state judges in discussions that were remarkable not only for their insights, but also for the apparent – sometimes vocal – respect among a group of accomplished professionals who often do battle in the courtroom.

Over the course of two days, four key themes emerged from the event:

Broad Support for Rule 23 Changes

Attorneys and judges across multiple panels expressed nearly universal approval of the amendments to Federal Rule of Civil Procedure 23. That aligns with the findings of Western Alliance Bank’s soon-to-be-released research study, in which more than 80 percent of the 117 attorneys, claims administrators and judges we surveyed supported the Rule 23 changes.

Much of the discussion at the Class Action Law Forum focused on changes made to Rule 23. Many judges said that the shift to a more robust preliminary approval process for settlements has helped provide them with the information they need to assess proposed agreements. That helps explain why 71 percent of the judges we surveyed viewed that change favorably.

Judges also appreciate the increased transparency brought on by the rule changes, especially given their fiduciary duty to class members. Because plaintiff’s and defense counsel typically form a unified front when presenting settlement proposals, judges sometimes find themselves in the awkward position of serving as the lone advocates for the class.

Several attorneys and judges also described the shift to electronic notice of settlements – which 80 percent of our survey respondents viewed positively – as a step toward aligning the legal system with the ways of modern communications. Claims administrators pointed out that the change also saves on expenses, which leaves more settlement funds for class members.

Litigation Around ‘the New Oil’

On a panel dedicated to privacy and data-breach class actions, one panelist described data as “the new oil” – i.e., the world economy’s most valuable commodity. And data’s rising value will make it a persistent target of cybercriminals. In recent years it has become increasingly clear that no organization is safe from ransomware attacks and other breaches.

At the conference, discussion of data breach litigation focused in part on challenges for attorneys and judges when it comes to sorting through the massive amounts of data in companies’ possession – a process critical to data breach suits (and, increasingly, other class actions). For example, plaintiff’s counsel must drill into data to demonstrate actual harm. That gets particularly complicated with consumer data, because many consumers provide inaccurate information – sometimes purposely, knowing their identity could be exposed in a breach.

The consensus at the conference seemed to be that the speed of evolution and progress in technology has vastly outrun lawmakers’ ability to shape policy that governs it. For class action litigators, that means statutory law often proves inadequate for protecting against breaches and or guiding the resulting lawsuits. This explains why most data breach complaints allege common-law causes of action such as negligence, fraud and contract claims.

Discovery: To Bifurcate or Not to Bifurcate?

The more intensive pre-approval requirements established by the amendments to Rule 23 have led to more robust discovery in the early parts of the litigation process. Some judges prefer to split discovery into two distinct parts, ordering the first round be limited to issues around class certification, such as ascertainability and predominance, because those questions essentially dictate whether the parties will move toward a settlement.

Conducting the discovery necessary to meet the new pre-approval transparency standards, and to convince judges that settlements are appropriate and fair, comes at a significant expense to plaintiff’s firms. Those expenses can be difficult for smaller firms to handle, which is sending many in search of alternative funding, such as litigation finance, or seeking partnerships with larger, better-capitalized firms. In this way, the Rule 23 changes could lead to a shakeup in the marketplace that rule-makers likely didn’t anticipate.

A System That’s Working

A judge involved in shaping the Rule 23 amendments went out of his way to emphasize that the changes are incremental and that the 50-year-old rule has held up extraordinarily well. That sentiment was echoed throughout the conference, with speakers and panelists emphasizing that, while the class action system may be imperfect, it ultimately performs quite well in serving its fundamental purpose: to provide justice to class members.

Many of the judges who appeared at the forum also spoke highly of class actions, with several jurists calling them their favorite types of matters. The cases raise sophisticated issues, feature exceptional practitioners on both sides, and offer opportunities to deliver true relief or recompense to large groups of citizens.

Each of those attributes was on display at the Class Action Forum, as were the powerful bonds and mutual respect forged in the course of litigating these profoundly important matters.