Defense attorney taking on 'manufactured' class actions
David Aronoff believes that if more defense attorneys would vigorously challenge the independence of class representatives there would be less manufactured litigation. They are family members or close friends of the plaintiff's counsel;
Aronoff, a partner with Thelen Reid Brown Raysman & Steiner in Los Angeles, is finding success by investigating relationships between plaintiffs and their lawyers and whether they have been improperly solicited. With this approach he's discovered that it's hard to find "clean" class reps.
In April, he derailed a California class action case against Oreck Direct involving 77,000 purchasers of air purifiers. U.S. District Judge Marilyn Hall Patel of the Northern District of California issued a scathing ruling, finding that the lawyer, not the class representative, was the driving force behind the litigation.
Aronoff argued that Paul Bodner would not adequately represent the interests of other class members. He showed that Bodner had answered a newspaper ad and had first met his lawyer in person the day before his deposition.
"The conduct in this action does not look good, does not sound good, and does not smell good. In fact, it reeks," Patel stated, according to a June 13 article in The Recorder.
Aronoff said that defendants in jurisdictions such as Madison County, which before CAFA (Class Action Fairness Act) was the so-called class action capital of the country, would be well-served by employing his tactics.
He talked about his strategies with the Record.
Record: How and why did you start investigating the fitness of class representatives?
Aronoff: I was looking for additional ways to defeat class certification apart from the obvious. I felt that many courts had become numb to class certification motions and had a knee-jerk reaction to grant without the necessary scrutiny of the class reps.
There was law in the securities class action area that was critical of proposed class representatives that "were not the driving force behind the litigation." Rather, it was the lawyers who became the driving force.
In order to find class reps, plaintiff's lawyers would engage friends, close associations, business partnes, employees and family members. There was no real movement against this practice.
Cases were getting certified and big settlements were being paid to lawyers for cases that they would manufacture. No one was calling them on it. Other lawyers saw their colleagues getting rich and they did the same.
Record: You were quoted as saying, "It's not easy to find a clean class representative." Will you elaborate? How do class representatives materialize for plaintiff's lawyers?
Aronoff: 99 percent of the time the class reps fall into the following categories:
They are closely associated in a business sense -- employees, accountants, referral sources, paralegals, legal assistants, or;
They were solicited in the newspapers and the Internet, and don't have a clue about the issues in the lawsuit. If they had not purchased the product, stock or service, the lawyers would tell them to do so and sometimes even gave them the money to do so.
I have been working on a case now in which the class reps are posterchildren for manufactured litigation: one is a family member, the other a business associate and the other a close friend of the lawyers.
What's up with that? And, they just don't have a clue and were told to go make purchases from the defendant's retail store.
Record: Your findings seemed to have impressed Judge Patel in Bodner v. Oreck. Do you believe that if more defense teams employed your tactics they would get similar results?
Aronoff: Yes. Without a doubt. It has worked in the past and is gathering more and more momentum. That some judges are not convinced yet -- there is no denying that they have a certain mentality that solicitation of class reps and trumped up litigation has historically been overlooked or tolerated.
Very few class action defense lawyers were attacking cases based upon the proposed class reps lack of independence. They were focusing on the conventional elements -- commonality and typicality. Something else needed to be done. More cases were being certified when they should not have been and larger and larger settlements were being paid out by defendants.
Record: What kinds of clients do you represent?
Aronoff: Mostly retail and financial institutions. Large and small. I love my clients. They are the most important part of why I practice law.
Record: How many cases have you actually investigated? Describe the results.
1. Bodner v. Oreck: Class rep was solicited by lawyer. Not the moving force behind the litigation. Cert denied;
2. Too, Inc. Class rep had a close association with counsel. Case dismissed;
3. Confidential: Class rep turned out to be the step-daughter of plaintiff's counsel. Case stayed;
4. Confidential: Class rep turned out to have a close business association with plaintiff's counsel. Case settled prior to certification. Settlement was highly favorable to defendant;
5. Confidential: Securities class action. Proposed class rep appeared to have business relationship with plaintiff's counsel, and had been plaintiff in other lawsuits brought by same counsel.
Case dismissed voluntarily; and
6. The Sharper Image. Judge certified class in the face of strong evidence showing solicitation and close associations.
Record: What kind of criticism have you received for boldly investigating class action plaintiffs?
Aronoff: None. Although it does not make me that popular with the plaintiff's bar.
Record: What kind of praise have you received?
Aronoff: Mostly from other defense lawyers who work in the class action area. They all want to give their clients the most zealous and best representation they can, and investigating whether the proposed class rep is truly independent is part of that.
Record: You're from the Los Angeles, Calif. area. What do Madison County, Illinois; the state of West Virginia and Jefferson County, Texas mean to you as a defense lawyer?
Aronoff: Madison County, West Virginia, Texas, etc. -- those are all places where class action lawyers look for and find "jackpot justice."
Clearly there are some judges that look the other way when it comes to manufactured litigation (as in other states too). Those places have become well known for lacking in scrutiny on whether a case should actually get class certification.
Perhaps it's the judges' sense that infirmities of a class rep should not be an escape hatch for who they would consider to be an otherwise potentially culpable corporate defendant with bottomless pockets.
Perhaps it's the manner in which judges must face election and re-election. Or, it could just be that there are not enough defense lawyers taking the issue of manufactured litigation up to the higher courts in those jurisdictions. Most of the class actions I defend have proposed class reps that don't really understand the issues in the case or even tried understand them.
They don't read the pleadings and typically don't spend any time consulting with their counsel on the case unless it's the day before their deposition. Unless and until defense lawyers vigorously investigate the independence of the class rep from their counsel and bring their findings before trial judges, and if necessary, appeal to reviewing courts, places like Madison County, the state of West Virginia and Jefferson County will continue to be destinations for manufactured class action litigation.