DEFENDING THE CLASS ACTION: BEST PRACTICES FOR TRIAL
Andrew J. McGuinness
Ann Arbor, Michigan
Reproduced with author permission.
by Andrew J. McGuinness
e pile yo ur leam's besl
efforts , the trial judge
has ce rtified a class action agai n st yo ur co mpany. Almost simultaneously, the rally cry from
the ba rb a ri a ns at yo ur
ga tes goes up by a notch
or two . Th e battle fo r
yo ur co mpan y's li ve li h ood is n ow at hand .
W hat now 7
Your defense t ea m h as a lready
so ught inte rl ocutory appeal of the
ce rtification o rd er. In federal court , it
has filed within 10 days of the ce rtifi cati on a Federal Rule of Civil Procedure 26 (f) petition in the Co urt of
App ea ls . However , th e nove lt y of
these appeals , auth o ri zed by an 1998
amendment , has wo rn thin (see In re
Delta Air Lines, 310 F.3d 953 , 95960 (6th Cir. 2002) "[TJ the Rule 23(f)
ap pea l is neve r to be ro utine . Th e
sheer number of class actions and the
unfo rtun ate ly lengt hy peri od necessa ry to co mpl ete a n appea l we ig h
againsl permitting interl ocuto ry ap peals o f class ce rtificatio n decisio ns
in ordinary cases, which invo lve the
application of well-established stan d a rd s to th e fac t s o f a particular
case .") As a res ult , the petition is rejected. In state co urt , a leave app licati on is either not permitted, has been
denied or is pending with no hope of
a stay by either the trial judge o r the
appe ll ate panel Unless so m ething
drastic happens, yo u are headed into
the relative ly uncharte red te rritory of
a class trial.
Before you ge t there--either by th e
urging of the co urt , yo ur CFO or outside directors-there will be a further
ro und of se ttl e me nt n ego ti at io n s .
Fro m the plaintiffs' pers pecti ve, th e
value o f the case has just go ne up exponentially. The one or few plaintiffs
named in th e co mplaint , who began
with no more than a ho pe of rep resenting hundreds or thousands more ,
have now bee n o ffi Cially recognized
as class wa rrio rs. At yo ur first postce rtifi cat io n h ea rin g or m ee tin g
C-2
among the
th e panies
parties , you
yo u notice
no ti ce a bit
more
counsel
's
o pp os in g co
un se l's
m
o re strut
s trut in opposing
walk;
back .
walk ; his shoulders are pulled back.
feel even more self-imClass counsel
counse l feel
ne ither manportanL than before but neither
portant
agement
o r the carrier's
ca rri e r's co
counsel
un se l
age
me nt nnor
have any aappetite
ppetite for
fo r the plaintiffs'
plainti rrs'
rapidl
lat ina settlement
se ttl e me nt d era pidl y esca lating
mands
youu do next?
mands.. What should yo
next'
Focus on the Certification Issue
Scrutinize
Sc
rutini ze the
the class ce rtification ruling.
nding.
Start with the judge's ruling on certificertifi -
cation
ca ti o n . Does th
thee co
court
urt signal
s ign a l any
prospect
narrowing
thee class'
class 7
pros pec t for
fo r narrow
ing th
Does the ruling suggest an argument
for
fo r eliminating any sub-categories of
of
damages
upon
o n trial managed amages based up
ability issues
issues!7 Is it premised on representations
pro mises by opposing
se ntatio ns or
o r promises
counsel at the hearin
hearing
g or in briefing
th at you
yo u believe to be demonstrably
that
false?
your
fa lse? What are yo
ur best prospects
pros pects
for reve
reversal
rsal of the order in the event
d oes not settle
se ttle and the trial
the case does
does
not
o t go welP
wel\7 Co
Conversely,
n ve rsely, are
d oes n
there claims or categories
catego ries of damages
for
your
ur trial tea
team
m feel
fee l the
fo r which yo
company has a particularly strong position on the facts and the law as reflected
instructions? For
ju ry instructions'
Oected in the
th e jury
presents
nts an
these claims, a class trial prese
opportunity to prevail for the cost ooff
defense,, such that other wou
would-be
ld -be
the defense
plaintiffs (except
(exce pt for opt-outs) will be
judicata (th
(thee princi
princi-precluded
precl
uded by res jlldicaLa
ple that a court
co urt judgement
judge ment is conclusive for the parties in any subsequent
in vo lving the
th e same
sa me cause of
of
litigation involving
action).
your
ur e ntire litigation
liti ga ti o n
In short,
s h o rt , yo
C-3
CLASS ACTION DEFENSE
strategy may be impacted by the parthee judge's class ce
certificatiticulars
culars ooff th
rtifi cation
ruling.
ti
on rulin
g. In addition, dep
depending
ending
on the nature ooff the claims and th
thee
type of insurance coverage
mayy
cove rage that ma
apply, this is an oopportune
pportune time to reeva luat e w
hi c h , if any, re
maining
evaluate
which
remaining
claims
cl a ims are cove
covered
re d ,
which may not be , and to
make
your
ce rt a in that yo
ur
m ake certain
litigation
liti
ga ti o n strategy going
go ing
forward
fo rw a rd maximizes the
insurance coverage available
youu are
able.. Also , since yo
going
go
ing to have to try the
basis
case on
o n a class
c lass ba
s is ,
yo u bind
make sure that you
the class when you
yo u win
at tri
trial.
al. Verify
Ve rify th
that
at th
thee
class notice satisfies due
process requirements
req uirements so
that
will
withstand
th at it w
ill w
ith s t a nd
II,
scrutiny
sc rutin y in th
thee futur
futuree
when
m e mb e r
w h e n a class member
op t out wants to bring
brin g
who did not opt
his or
o r her own claim after the class
action has been resolved .
Build a record. While you may have
already shot twice and missed (a motion
dismiss
sm iss and opposition to
ti
o n to di
class certification)
rules
ce rtification),, the class rul
es give
you
yo u more ammunition
ammuniti on.. Under Federal
23(c)(l ) (C),
(C), the
th e judge may
al Rule 23(c)(l)
re-assess certification
ce rtification at any time before a judgment is entered (i.e
(Le ., right
through
trial). And even if yo
th
rough tria\).
your
ur team
could not pers
persuade
uade the trial judge at
thee certification hearing that individth
some
ual issues predominate , or
o r that so
me
internal
intern al conOict
conni ct among class memme mco nfide nce th
that
at
bers destroyed any confidence
the case could
co uld proceed to a class trial
with suffi
sufficient
assurance
that
cie nt ass
ura n ce th
a t lead
plaintiffs and th
their
e ir co
counsel
unse l would
wo uld
represent the
th e interests ooff absent class
sufficiently
satisfy
members suffi
cie ntl y to sat
isfy their
th eir
due process rights
ri ghts , subsequent
subse quent di
dissthee
covery or
o r evidence
ev ide n ce adduced
addu ce d at th
trial
may
tri a l m
ay ppersuade
e rs u ade the
th e court
co urt to
to
change its mind.
mind. Even
Eve n if the judge is
steadfast in proceeding on
o n a class
c la ss
basis,
bUilding a record
bas
is, you
yo u aare
re building
reco rd for
possible appeal.
There is no better place to demonstrate grounds
possible
appeal
gro und s for poss
ibl e ap
pea l
unfairness
ess to the class acbased on unfairn
tion defendant than at the trial itself.
Formal requ
requests
es ts (or subpoenas)
s ubp oe n as) to
tl,
"each me
member
mbe r of the plaintiff class"
to cross-examine each on his or her
rreliance
e lian ce on
o n allegedly
a ll ege dl y misleading
mi s lea ding
company
statements
(causation),
co mpan y state
me nts (ca
u sa tio n ), or
or
thee importance to each class memme mth
decisionn to buy the
ber's decisio
th e product or
service of
o f the claimed misreprese
misrepresentantati on or omission (materi
(materialialition
ty) , met by the trial court's
thee
predictable rejection ooff th
qu es t , ca
illu s trat e to
re
request
cann illustrate
thee app
appellate
th
e llate ppanel
a n e l hhow
ow
thee defendant has been
th
bee n effectively
fecti ve ly denied its right
ri ght to
[
Winning the Damages Case
It may seem odd to start a discussion
discussio n
of
o f winning a class action trial with
the topic of damages, but this is the
priority in many such cases . A class
Just
action is a numbers game
ga m e . Ju
st as
plaintiffs see dollar
d o ll a r signs
s ig n s in the
th e
prospect
pros p ec t of
o f multipl
multiplying
ying each
eac h class
cl ass
member's claim by a factor
fa cto r ooff th
thou
ou sands , for
fo r each dollar
do llar
sands,
yo u shave
in damages you
pr ese ntin g a
o ff by
b y presenting
off
1(1
III l)l\,1 I. /1
u pee ri
rioo r damages
da mages
s up
dIll uJltltU I lId (li ('/
case yo
youu can
ca n realize
rea lize
thee sa
same
multiplier
th
m e multipli
er
thee op
opposite
posite
effect in th
direction
direc
ti o n . And while
{I I
II t I{
every
eve
ry
defendant
defe ndant
wants to hit a hhome
o me
ha ve each ooff the claims tried on th
their
ei r
have
run on
o n liability
li ab ility,, an
a n ea
early
rl y focus
foc u s on
merits .
de-damages need not distract from
fr o m de
m is not permitted
Eve n if your tea
Even
team
veloping
thee merits of
defen se on th
of
velo ping a defense
cross-examine
min e class members
me mbe rs at
at
to cross-exa
yo ur company's conduct.
your
trial , there are other ways to build an
trial,
So me other reason
reasonss to focus
focu s first
Some
evidentiary
reco rd of
o f a meritorious
me rito rio u s
ev ide ntiary record
and foremost
fo remost on your d
damages
amages trial
dden
defense.
e. Judges ma
mayy be more
mo re willing
strategy ma
mayy be less
les aapparent.
ppare nt. For
to permit reasonable pre-trial discovone, plaintiffs
pl aintiffs routinely do a bad job
ery of
o f absent
a bse nt class m
members
e mbe rs aafter
ft e r
on ddamages
amages . They hire the most agclass nnotice
beenn sent
se nt out,
o ut , and
oti ce has bee
gressive,
ive, and th
therefore
e refo re incredible,
in c re dibl e,
gress
after class members have been given
give n
economists
eco n o mi sts and other
o ther damages exthe opportunity to opt out, but have
pe
rts they can find . Many times the
perts
declined to do so . And there are aldamages calculations they
th ey come
co me up
ways th
laintiffs. Their dethee named pplaintiffs.
with do
d o not just strain credulity, they
positio n or trial testimony can prove
position
leave it broken in pieces on the
th e Ooor.
noo r.
fertile
fe rtile ground
g ro und from which to show
There
The
re is a goo
good
d chance
c han ce yo
your
ur trial
important
impo rtant diffe
differences
re n ces among class
team can convince the
th e jury that the
th e
members on issues that matter to one
ric damages estimate profstratosphe
stratospheric
or more defenses
d efenses.
economist
fered by plaintiffs' eco
no mist is just
Even if plaintiffs'
co unse l has se
se-pl aintiffs' counsel
sky. And once the
th e jury
that: pie in the sky.
representati ves who eac
lected class representatives
eachh
co mes to appreciate
a pprec iate th
pl aintiffs'
comes
thee plaintiffs'
satisfy all the
th e elements
e le ments necessary
necessa ry to
greed there is a good chance that its
state a claim , your
yo ur discove
discovery
ry might
sympathyy fo
forr the plaintiffs' claims will
sympath
reveal
revea l that in some instances they do
wane
wa
n e,, and the pl
plaintiffs'
a intiffs' and lea
lead
d
so in unique ways that
that,, by their very
counsel's
co unse l's credibility will suffer.
nature, suggest that other class memAnother reaso
reasonn to focus on
o n dambers might not be able to satisfy that
ages between
betwee n certification
certifi cati on and trial
trial is
example,
le, a named plainelement. For examp
that this is often
o fte n th
thee most complex
co mpl ex
mi ght establish th
at she "reason"reason tiff might
that
part of
o f the
th e case . Except
Exce pt in product
allegedly
ly mislead(where
highlyy tec
technical
ably relied " on an alleged
defect cases (w
he re highl
hni ca l
scientific,
ing statement attributed to the
th e defencausati on
scientifi c, engineering
enginee rin g and causation
dant beca
because
u se she
s he had n
noo access at
u es may
ma y pred
predominate)
o min ate),, in man
manyy
issues
iss
home or
work
internet , where
o r wo
rk to the internet,
commercial
actions , the liability
commercial class actions,
abundant additional information was
issues
iss ues are relatively
relati vely straightforward
straightfo rwa rd :
pl"ll
l
widely available to co
correct
rrec t th
thee allegedlyy mis
legedl
misleading
leading character
characte r ooff the
statement.
tl.
I
ll(
C-4
CLASS ACTION
ACT ION DEFENSE
management
thee
fi x prices?
prices)
and sensitize
se ns itiz e manage
me nt ttoo th
Was there an agreement to fix
range of possible outcomes
Did the defendant mislead investors)
investors?
Did the defendant adequately disclose
Winning the liability
Liab ility Case
the terms
te rms,, conditions
co nditio ns and charges?
charges)
Thee range of
Th
o f damages
d amages calculations
ca lculatio ns
Winning a class action at trial
trial is not
wro ngdoing,
generated by the alleged wrongdoing,
that different in many res
pects from
respects
however, can be far more layered
laye red and
complex
mplex commerwinning any large, co
complex
co
mpl ex depending upon
up o n th
thee ascial case . There are some
so me important
impo rtant
sumptions
s umpti o n s und
underlying
e rl ying competing
co mp e tin g
differences, however.
damages
dama
ges m
models
ode ls . Gathering
Ga th e rin g and
a nd
As defendant in a class action,
action , you
yo u
building the data and other elements
overarching
will have four ove
rarching disnecessary
s u cnecessa ry for a succovery
cove
ry goa
goals
ls : (1) to comply
co mpl y
cessful
cess
ful damages
d amages case
with all lawful
cann be an arduous
law ful and legitimate
ca
a rdu o u s,,
discovery obligations in order
o rder
time-consuming
time-co
n su ming unto keep
kee p your
yo ur company out of
dertaking . ln
In other
o th er
thee judge
judge,,
hhot
o t water with th
words , th
there
e re may be
avoid
embarraSSing sanctions
more
work
mo re wo
rk to do
d o on
on
avo
id embarrassing
sanctio ns,,
damages
d amages than on liability, so it is best to
ge t started early.
get
early.
J ), l
I II I ' I II l
youu
Assess whether yo
I
I' J
(t
h I II,III1
l t ,,)1(1\
Pli \ I),
/ll( 1'(
,({ (ILl
,l'.
Ih
f lill
(I< I ' ,]
have allocated enough
resources to the damtl], 1)1(,dt,(
til,
1)1(I(ht I{ '\(( I \ I
I It ' Ill l (, I
ages case Do yo
youu
I
have th
thee best expert
ex pe rt
\\(!!(1
l
(I I
lit
1I f I
tI l' 1\
I)'J, )/'ll
available?
ava
il able? In larger ,
mo re co
more
complex
mpl ex cases
youu may need both a
yo
testifying
tes tifying expert
expe rt and
additional
and fo
foreclose
reclose the plaintiff
pl a intiff lawyers
lawye rs
additi
onal,, nontestifying
no ntes tifying consulting
co nsultin g
experts
from portraying your company or
d own blind alo r its
ex
perts to help chase down
officers
leys and to dig up the data and other
o ffi ce rs as bad actors at trial ; (2) to
enable your trial team to discern and
that
facts th
at will allow the testifying exrecord
pert to make the most persuasive
persuas ive case
build a winning factual reco
rd at trial ;
possible
(3 ) to pun
punch
possible.. Ask lead trial counsel
counse l which
(3)
ch holes
ho les in the plaintiffs'
members of
case through offensive
o ffensive discovery; (4)
o f the trial
tri al team
tea m are focused
on the damages case and satisfy yourto avoid excessive costs and manageyo urself that sufficient resources are alloment
di s tr ac ti o n in th
thee pr
process
ocess .
me nt distraction
cated there.
there . Perhaps most importantWhile these goals are common to all
ly
facilitate
thee
complex
co mplex commercial
co mme rcial cases
cases,, the dyd yly,, fac
ilita te access to those
th ose in th
company
namics ooff a class trial also require a
pos itio n to help
hel p
co mpany best in a position
focus
uncovering
defense
foc
the trial
tri a l team to win the damages
us on
o n uncove
rin g good defe
nse
facts and ooffensive
discovery.
case .
ffensive di
scove ry. Those
If the stakes justify it, ask yo
your
trial
pertaining
pe
ur trial
rtaining to ooffensive
ffensive discoverydiscove ryteam to run a mock damages trial
trial for
i.e.
i.e.,, demonstrating meaningful factual
youu , perhaps with yo
your
oth-yo
differences as to the elements of each
ur (FO
( FO and oth
individual class member's claim or a
manageme nt with responsibiliers in management
thee case
ty for th
defense thereto-are discussed above .
case.. Since
Sin ce the
th e damages
case is frequently carried
forr developing
ca rri ed by one or
or
As fo
deve lo ping a favorable
fa vo rable factutwo testifying
trial,, it is commonly the
testifyi ng experts,
ex perts , the disruption
disruptio n
al record for trial
to management
case in class actions that the vast mamanage ment should be minimal.
jority ooff the factual
One of the consulting
co nsulting experts
expe rts can sit
fa ctual record
reco rd pertinent
in as a surrogate
surr oga te plaintiffs' expert.
ex pe rt .
to issues of liabilities and damages re(orr co-defenneutral mock jurors
side with the defendant (o
Whether oorr not neutral
are empanelled
plaintiffs. This preempanelled , such an exercise
exe rcise will
ddants)
ants),, and not plaintiffs
give you
sents
yo u an opportunity
oppo rtunity to assess the
se nts both challenges and oopportunipportunistrength of
ties . O
One
off
ne pitfall to avoid is that o
o f this key part of
o f the
th e case
simply
responding
s imply res
ponding to plaintiffs' discovery requests. There is no reason to
counse l necesbelieve that plaintiffs' counsel
sarily
expertise
thee
rea l ex
pe rtise in th
saril y have any real
matterr of
o f th
thee case,
case , or
o r th
that
at
ssubject
ubj ec t matte
(even if they do)
d o) they have any interest in uncovering
uncove ring facts helpful to the
defense . And, however accomplished
acco mplished
or experienced
ex pe rie nce d in the field
fi eld defense
neve r knows
kn ows the
counsel may be , it never
product, service,
service , science or
o r business
people
at issue as well as peo
ple inside the
company
because
there
co
mpa ny.. Moreover
Mo reove r , beca
use the
re
are at most
m os t a relative
re lati ve handful of
of
named plaintiffs
plai ntiffs,, there is a tendency
comprising
to view
v iew their
th eir claims as co
mprising
those of
o f the class , when in ac
actuality
tuality
other class member's claims may look
very
different.
ve
ry diffe
re nt. It is imperative that those most knowlcompany
mpany in
edgeable in the co
tl
the area of
o f plaintiffs' allega\ 1l I
tions be identified and enlisthelp
ed to he
lp defense counsel
co unse l
"beat the bushes" for
fo r favorfavo rable facts
facts..
You will also
a lso need
n ee d ttoo
consider
co
ns ide r class-related
c lass- re la ted motions
ti
o n s in limine
limin e ( motions
m o ti o n s
made at the beginning ooff a
trial requesting
ce rt ain evidence
evide nce be
requestin g certain
excluded
One
exc
lud ed ). O
ne of
o f the
th e disquieting
di squi e tin g
that
aspects of
o f a class
c la ss trial is th
at the
th e
claims ooff individuals
neverr acindi vidual s who neve
tually
tu
a ll y appear in court
co urt aare
re being
be in g
there.
theretried the
re. It is important,
imp o rt a nt , th
e refore
those
ose who do
d o show
s h ow up
fo re , that th
not
n
o t be permitted
pe rmitte d , individuall
indi v idu a ll y or
through
throu
gh their experts
ex perts or
o r lawyers
lawye rs,, to
about
testify based on
o n hearsay
hea rsay abo
ut facts
fa cts
pertaining
me mbe rs'
pe rtaining to absent class members'
claims
w hi c h they have
ha ve no
cl a im s about which
personal
know ledge.
pe rso nal knowledge.
The biggest
bigges t risk
ris k here comes
co mes from
plaintiffs' liability and ddamages
amages experts
perts.. Plaintiffs' counsel
counsel are most likely to attempt to use these hired guns
to introduce themes and eve
evenn facts to
the jury
about abse
absent
ju ry aboLll
nt class members
who plaintiffs have never identified ,
provided interrogatory
responses
interrogato ry res
po nses or
documents about, or placed on a witlist
disclosure
nness
ess li
s t or
o r other di
sc los ure that
their
might have
ha ve led to th
eir ddepositions
e positio ns
being
takenn . Th
Thee bases for
ex fo r the exbe in g take
pert's
pe rt's opinions
o pinio ns as to the claims and
class
members
damages of
o f absent
a bse nt cla
ss me
mb e rs
need to be carefully
ca refu ll y explored in depo-
d
!i
'I'l(
C-5
CLASS ACTION DEFENSE
sition.
sition . To the extent they lack a legitimate factual
fac tual basis, your
yo ur team should
consider seeking to exclude this testimony in advance of trial through the
(Da ubert v.v. Merrell
filing of a Daubert (Daubert
U.S.. 579 (1993))
Dow Phanns , 509 U.S
or DaLlbert-type
Daubert-type motion
under
und
e r Federal Ru
Rule
le of
of
Evidence 702 or
o r its
it s
state law analogue.
Also consider
co nside r tailoring you
yourr jury research
resea rch
to class issues
iss u es . It has
become common practice
ti
ce in many big cases
for the
th e parties to ene ngage jury consu
consultants
ltants
Lc('(l/l
various
to evaluate vario
us fac-
I
ttors
o r s,, such
s u ch as trial
IJ, /'
l
witnesses,,
themes , key witnesses
and
Given
a nd damages . Give
n
()'
ILl
increasing
the in
creas ing notori
n oto ri ety of
o f class actions
ac ti ons in
our
society
ty and in political
po liti ca l debate,
debate ,
o ur socie
consider
some
co nsider focusing
focusi ng so
me research on
class
c lass issues before going
go in g to tri
trial.
a l.
Which
W
hich groups
gro ups of potential
po tential jurors in
likely
the community
co mmunit y aare
re most
m os t like
ly to
with
view class actions w
ith suspicion
s us pi c io n?7
Which
mo re likely to see
W
hich groups are more
them
em as a beneficial way to even the
th
procedural
score
betweenn consumers
ural sco
re betwee
proced
and manufacturers? Which ones are
more likely to believe
be lieve that a case ceraction
tified by the
ti on is
th e judge as a class ac
likely to have merit?
me rit? Which
W hich are more
mo re
likely to feel
fee l disappointed
disappo inted that none
those
action
they
of th
ose class ac
ti o n notices
n ot ices th
ey
received
may have
ha ve rece
ive d in the
th e mail has
h as
lead
mea nin g ful recovery
recove ry for
lea d to a meaningful
individually?
them individuall
y? Which ones hhave
ave
noticed
thee hundred
hundredss ooff tho
thousands
usa nd s
no
tice d th
thee plaintiff
of ddollars
o ll ars collected
co llected bbyy th
lawyers
actions
which
lawye
rs in class acti
ons in whi
ch the
class members have each received
rece ived a
check
evenn just a
$2 .80 or eve
c h eck for $2.80
coupon?
Evenn if yo
youu do
co
up o n ? Eve
d o not
n o t hire
consultants to research
resea rch these
th ese points
po ints,,
these
questions
th
ese types of
o f qu
es ti o n s can
ca n shed
sh ed
light on potential
potential jurors
asked
juro rs if as
ked before trial,
trial , during voire
voire dire (when the
th e
lawyers
ha ve some opportunity
o pp ort unit y to
la wyers have
interview
before
inte
rview jurors
juro rs befo
re they are assigned to th
thee panel
).
panel).
Finally, make sure you
your
yo u have yo
ur
team in place for
fo r trial. As alluded to
February
article,, "Dery 2004 RM article
in the Februa
thee Class
Keeping
fending th
C lass Action:
Ac ti o n : Kee
pin g
Best Practices in Mind ," it is imporur company
co mpany be defended
tant that yo
your
by legal counsel ex
experienced
perienced in class
actions . At trial,
trial , it is equally imporactions.
tant that yo
your
ur company
co mpany be represented by counsel
counse l with
w ith the
th e appropriate
depth of experience
ex perience in taking
J
big cases to trial in front of a
jury. It is no secret that most
jury
class
dissc lass action cases are di
missed,, refused
missed
re fused certification
ce rtificati o n
or settled befo
before
ge t
re they ever get
to trial. Once
IikeO nce it appears like-
II
)1,1
II
:
'~l t
your
ly that yo
ur case will be tried,
tried , satisfy
yourself
youu have an adequate
yo
urse lf that
th at yo
team..
level ooff trial experience on your team
Managing Expectations and
Contingencies
There is a reason
reaso n your
yo ur case hhas
as not
settled
your
se ttled and why yo
ur company
co mpany has
defended it in such a steadfast man
man-th e claims
c la im s lack
lac k merit
m e rit. You
nner
e r : the
prevailil at trial. If you stay the
should preva
course
cou rse and devote
d evo t e sufficient
s uffi c ie nt resources
probablyy
so
urces to the case that
th at is probabl
what will happen
hap pen . As in life, however, what should happen is not always
er,
happen..
what ddoes
oes happen
Betweenn the class certification phase
Betwee
and trial it is important that key management
informed
and,, to the
rmed and
ageme
nt be kept info
in vo lved in the case.
case .
extent necessary,
necessary, involved
Not only will this maximize the effectiveness
ti ve ness of your
yo ur outside legal team in
defeating the claims, it will also work
to assure management that everything
reasonably
that can reasonab
ly be done to defeat
the claims is being done
done..
Assuming
insurance
Assumin g there is in
suran ce coverage,, kee
keepp tabs oonn defense costs, parage
ticularly
ti cularl y where
whe re (as is commonly
commo nl y the
th e
case) they diminish the total amount
available
satisfy
adverse
ava
il able to satis
fy an ad
ve rse judgment or
possible
o r to contribute
co ntribute to a poss
ible
settlement. Make sure the claims adle
justor or insurer counsel
counse l responsib
respo nsible
for the case is kept in the loop on defense strategy and status.
Discuss with your
yo ur legal team
tea m what
options are available
ava ilable to the company if
the jury gets it wro
wrong
ng and levies a substantial award. Before trial,
trial , discuss with
trial counsel,
co unsel, the insurer and management the likely range of costs of any
bond that may be necessary to stay a
ve rse judgment during
durin g
potentially
adverse
po tentially ad
appeal. Do this not
no t because
becau se you
yo u assume the company is going to lose, but
to have answers to management's
manage ment's questions in case it does.
Most impo
importantly,
rt antl y, satisfy
sati sfy
yo urself that manage
ment has
yourself
management
devo ted sufficient resources
devoted
in terms of time and attention
to enable trial counsel
counsel to put
on the most effective defense
possible
wit h tria
triall
poss ible . Discuss with
counsel
appropriate
priate
co unse l who an appro
company representative is to
represent the company throughout the
trial. Stay the
th e course,
course , but if adverse
trial developments indicate that settlement nego
negotiations
tiati on s should
sh o uld be rekinrek indled,, you need key manage
management
ment (and
dled
possibly th
thee board)
boa rd ) up to speed
s peed on
on
where things stand.
stand . This can be an important tas
taskk for the company
compan y representative who is sitting through the trial.
Develop aalternative
lter nati ve media
medi a plans
your
with yo
ur corporate
corp orate communications
department
befo re the jury reaches
d epa rtment before
adverse,
its verdict.
ve rdi ct. If ad
ve rse , the press release should capture
ca pture the principle defense theme and possibly
possib ly draw attenatten tion
ti on to the central
ce ntral error that will
wi ll be
appeal.
Orr in th
thee more
pressed on
o n ap
pea l. O
likely event ooff a favorable
verdict,
favo rable ve
rdi ct , it
should
shou ld praise the jury
ju ry for its wisdom
in finding
co mpany on
o n all
findin g for
fo r your company
contested issues.
issues.
R
McG uinness is an attorAndrew]. McGuinness
PLLC, with
ney with Dykema Gossett PLLC,
defending class action lawexperience deJending
lawsuits
various aareas
sui
ts in varimls
reas including antitrust, secUlities,
securities, conSLlmer
consumer Jrmld
frmld,, untitnlst,
fair trade practices and product liability. He has served as co-editor
co-edi tor of Securities News, the news/euer
newsletter of the
American Bar Association Litigation
Section's
Securities Litigation Comm
CommitSections Secwities
ittee. He is also a subcommittee chair oj
of
tee.
the ABA Litiga
Litigation
Section's
tion Secti
on's Derivative
and Class Action Committee.
Co mmittee.