“There you go again,” CJAC

In a March 12, 2009 blog post entitled Class Actions Slamming Our Courts, But Seldom Going to Trial, CJAC, once again, calls for an immediate right to appeal an order granting certification. Just like it did back in 2008, when it was supporting AB 1905, CJAC is back to denouncing the current class action device in California as something akin to a congealing mass that is paralyzing the gears of justice. This time CJAC’s campaign is in support of Assembly Bill 298, authored by Assembly Member Van Tran. However, CJAC is seemingly more concerned with creating an illusion of chaos than with offering a fair presentation of the data surrounding class actions. Starting with the title of its post, a quick search of Findings of the Study of California Class Action Litigation, 2000-2006 (“Study”) cited in CJAC’s post reveals no mention of Court’s getting “slammed” by class actions.

Continuing, CJAC says, “A just-released California Judicial Council report says that class action lawsuits are booming in California, but that only a small percentage (0.7%) ever go to trial.” Again, no mention in the Study that class action suits are booming, and the truth differs markedly from the hyberbole. According to the Study cited in CJAC’s blog post, “Study courts reported a total of 3,711 class action cases filed between 2000 and 2005.” (Study, at p. 3.) What will our system of justice do under the weight of so many class actions? It likely won’t notice them, as suggested by these additional statistics from the Judicial Council’s 2007 Court Statistics Report Introduction: “Civil filings totaled 1,418,490, and civil dispositions totaled 1,268,153 in FY 2005–2006.” Nearly one and one-half million civil filings in a one year period in California. Contrast that number with the paltry count of 3,711 class action cases in 6-year period, and the impressiveness of the class action filing numbers diminishes. Moreover, California’s class actions are routinely being handled in trial courts established under California’s Complex Civil Litigation Pilot Program. Those courts are uniquely positioned to handle complex cases, like class actions, efficiently and effectively.

CJAC’s post said, “The study found a 63% increase in class action filings between 2000 and 2005 in the 12 courts reviewed. The increase was in contrast to the overall civil filings, which decreased during that same time period.” But CJAC doesn’t mention the theories in the Study as to why that increase might have occurred. From the Study:

“It is important to note that class action cases represent less than one-half of one percent of all unlimited civil filings in the study courts during the study period. Very few class action cases are filed as compared to the entire unlimited civil category and, as previously discussed, discreet events can create an immediate filing effect in the class action segment. For example, a natural disaster may cause a significant increase in insurance-related class action activity without affecting overall unlimited civil filings. Similarly, a change in the law, as in the CAFA example cited above, may also have an effect on this litigation type that is not seen elsewhere. Both of these examples could create observed divergences from unlimited civil filings that are unique to the class action arena. Thus, filing trends in the overall unlimited civil category are not reliable predictors of class action behavior.

(Study, at p. 4.) In other words, class actions, a tiny portion of all civil filings, may display reactions to significant events not discernable when examining the hundreds of thousands of unlimited civil filings each year or the millions of total filings each year.

But because the Study doesn’t actually do much to advance CJAC’s objectives, CJAC moves on to assertions having no connection to the Study: “Many cases settle immediately after class certification because defendants fear the large cost of going to trial and find it cheaper to settle whether the underlying claim has merit or not.” Really? Based on what? It can’t be the Study figures, which offer some surprising statistics, in a handy chart:

Certification status of disposed cases

Certification Status	n	Percent
No Certification	1,005	77.7%
Certified by motion OR as part of a settlement	277	21.4%
Certified by BOTH motion and as part of a settlement	12	0.9%
All Cases	1,294	100.0%

(Study, at p. C11, where n represents the number of cases in a category.) 77.7% of all class actions reaching a disposition during the Study period were not certified. Only 21.4% of all class actions were certified either as part of a settlement or as part of a contested certification motion. However, of the 1,294 class actions tracked in the sample group, 413 cases in this sample were resolved through settlement. (Study, at p. C1.) Comparing the 277 figure for certification for any reason (disputed or for settlement) to the 413 figure for any type of settlement, it is evident that at least 136 of the class actions in the sample settled on non-class terms, and possibly more than that. So much for image of defendants falling over themselves to settle class actions because of the fear of the massive costs associated with litigating a class action.  CJAC says, "If California law granted the defendant the same right to appeal the class certification decision, only valid class action cases could proceed."  Evidently, CJAC concludes that, even with 77.7% of the Study cases failing to achieve certification, even more of an impediment is needed.  CJAC also neglects to mention that some defendants may choose to settle class actions because they know that they violated the law and simply want a settlement discount on their liability.

But going further, what is different about a defendant settling a class action because it is cheaper than going to trial when compared to every defendant that settles an individual suit because it might be cheaper to settle, irrespective of merit? I once heard a mediator opine that, due to the costs of litigation, he estimated that no case with less than $75,000 in dispute should go to trial. CJAC’s position devolves into argumentum ad terrorem, with nothing of substance behind it.

Known as a “death knell” ruling, an order denying certification to an entire class is appealable because it is the legal equivalent of a dismissal of the action as to all members of the class other than the named plaintiff. (See, e.g., Linder v. Thrifty Oil Co., 23 C4th 429 (2000).) Absent class members must decide whether to file a tidal wave of individual suits, or abandon their rights. Allowing an appeal of the denial of certification is comparable to the right of appeal following the termination of a claim. A defendant, on the other hand, retains the right to challenge a claim on the merits after certification is granted. If the defendant prevails, that victory is enforceable against the entire class. If the defendant loses on the merits after certification, the defendant can then challenge both the certification order and the order on the merits on appeal. And if the defendant can’t beat certification and doesn’t prevail on the merits and can’t convince a court of appeal that any error of significance was responsible for the result below, then the system operated correctly.

The alternative is what CJAC wants: the immediate cessation of litigation in the trial court upon the issuance of an order granting or denying certification. And the class that may have been victimized by a defendant gets to sit by and wait several more years for recompense. Keep in mind that, even after certification is granted, a trial court can “decertify” a class if later-discovered information proves that course appropriate. In the CJAC universe, a defendant could appeal the granting of certification. Then, if that year and a half long detour to the Court of Appeal proved unsuccessful, the defendant could file a motion to decertify the class after remand. If that motion were denied, it, too, would likely generate an immediate right of appeal. Because there is no numerical limit on the number of times a defendant can seek decertification (other than the limit imposed by the need for “new” evidence to support the motion), the number of appeals of right could be staggering. In other words, the consequences of proposals like that contained in AB 298 would essentially place class actions in the deep freeze of appellate activity until the cost of litigation broke the plaintiff.

Has CJAC made the case for essentially destroying the rights of plaintiffs in cases that constitute less than one-half of one percent of all unlimited civil filings? Not even close. And if CJAC continues with its highly selective citation to statistics, it will also confirm for itself an absence of credibility in legal discourse.