CHARLESTON — The law for class action lawsuits has evolved somewhat since 1993, when Erin Brockovich began the eventually famous work that resulted in a $333 million settlement for a company’s alleged failure to promptly notice toxic water pollution in a California community.
Changes to class action lawsuits have come in small doses on both the state and federal level. More alterations could be on the way.
Ryan Donovan, a partner at Hissam Forman Donovan Ritchie PLLC in Charleston, has represented both plaintiffs and defendants in class action lawsuits.
Donovan said West Virginia’s class action law is “changing, for certain.”
“I see it from both sides, and I think anyone who says cases should never be certified is wrong, just as anyone who thinks that classes should almost always be certified is wrong,” Donovan said.
“But I think in this state, there is a future for class cases. We have, for example, a consumer statute in this state that provides consumers with uniform rights and uniform damages, uniform defenses, uniform elements. Those are the kind of cases that have been certified, are probably going to continue to be certified, and probably should continue to be certified moving forward,” Donovan said.
“What I think we’re going to see rolled back, and what I think probably should be rolled back, are the sorts of personal injury, toxic tort, and that kind of class action case where the members of the class are hard to identify and where the individualized issues of damages exposure, pre-existing conditions, etc, really overwhelm the individual issues and make it impossible to resolve the case as a practical matter,” he said.
Marc E. Williams is the managing partner of the West Virginia office of national law firm Nelson Mullins. Mullins handles complex cases nationally in an array of litigation areas and has tried more than 100 jury trials and appeals in state and federal courts throughout his career.
One of his specialties is representing defendants in class action lawsuits.
Williams said he’s seen more class action lawsuits being filed in state court vs. in the federal system these days.
“I think there are some pretty obvious reasons for that. Plaintiffs lawyers find, generally, that class actions generate larger settlements, which makes sense considering instead of it being a single plaintiff case with a recovery for one plaintiff, you can get the potential at least to get a settlement that would be on behalf of a class of similarly affected individuals,” Williams said.
He pointed to “consumer finance litigation as an example, whether it’s collection matters, or how banks deal with their customers. If a plaintiff comes in and says, ‘I’ve been treated unfairly by my mortgage company,’ as an example, and you resolve that, that’s probably not going to be monetized in a great way for the plaintiff’s lawyer. He’s not going to make a lot of money, is basically the harsh truth.
“But if he brings the case as a class action on behalf of everybody who had the same problem with that mortgage company, then you can settle the case on behalf of all of those affected customers, not just one,” Williams said.
“So obviously it didn’t take long for the plaintiffs lawyers at their conventions and in their meetings and in their list serves to discover that they could make a lot more money if they file a class action. So as a result, we’re seeing a lot more of them. And frankly, a lot more that don’t belong here. And as a result people like me have to get hired to fight that,” he said.
The federal system’s rules have been “a little more stringent,” but “in West Virginia, that’s changing,” Williams said.
“Our Supreme Court of Appeals is actually changing the way class actions are dealt with, and it happens a case at a time, over time. It’s not something that happens rapidly. But over the last four or five years, our Supreme Court of Appeals has tended to shift how class actions are interpreted and are handled to track the federal system. So that’s one component,” Williams said.
“The second aspect is what we would call national class actions, and that would be a class action regarding all states. It would be filed in one spot. It could be filed in West Virginia, as an example. But then the class of people impacted would be nationwide. And you see those a lot in securities cases. Large data breaches. Like if somebody, if there’s a breach of customer data at [a large retail store, an online video game company, a credit card corporation] or something like that, those tend to be larger, nationwide class actions. And we’re seeing a lot of those as well, especially in this privacy and data breach issue,” Williams said.
“That’s a really hot area for class actions, because the amount of information that companies are maintaining in an electronic format on their customers or their employees is staggering. I mean it’s just a staggering amount of information that they’re maintaining, and if there’s a breach, whether it’s intentional or a negligent breach, and that information gets out, it generally is going to impact thousands or hundreds of thousands of people. And to the extent that we see an increase in nationwide class actions, a lot of those are in this area,” Williams said.
John W. Barrett is a partner with Bailey & Glasser LLP practicing out of Washington and Charleston. He represents consumers in class action lawsuits brought under federal telemarking laws, called TCPA actions, as well as through consumer protection statutes and consumer warranty laws. Barrett has helped win over $200 million for consumers through class action lawsuits, including a recent telemarketing lawsuit where he was co-lead for the trial and lead appellate counsel. That went to trial, where the jury returned a $61.3 million judgment for the class. The Fourth Circuit upheld the judgment.
Barrett sees class actions as “critical, as a means of enforcing the law.”
“The government doesn’t have the resources or hasn’t committed the resources to enforce a lot of consumer protection laws, such as, for example, the TCPA, which was the Telephone Consumer Protection Act. It protects people’s privacy from telemarketing calls, robo calls,” Barrett said.
“The federal enforcement efforts and the state enforcement efforts are not sufficient to really make an impact on the enforcement of those laws. So that’s where class actions come in. Class actions are pursued by counsel generally who have experience in this sort of thing, and overseen by courts, whose role is to make sure that everything is done fairly and in a manner that will protect the class members. So, as a supplemental means, or sometimes even primary means of enforcing the law, class actions are and will remain extremely important, Barrett said.
Barrett agrees that some cases “are more efficiently brought as mass actions as opposed to class actions. In the TCPA, for example, which is where I do a lot of class litigation, the Court of Appeals for the Fourth Circuit … in May 2019 wrote an opinion that very strongly recognized the importance of class actions in enforcing laws that have fairly low dollar amount penalties on an individual basis. So in those cases the penalties are $500 to $1,500 per violation.”
“As individual cases, a consumer cannot go toe-to-toe with a major corporation, but on a class basis can do so. I think that in the context of personal injuries, which are very different, where the damages are quite different and the causation issues are very different, mass actions can sometimes be a better way of recovering compensation for the plaintiffs. So I would say that mass actions also seem to be enabled by the emerging gig economy, the economies of scale, realized by technology, and that is something that is new, and I think you will see a lot of changes there,” Barrett said.
“As I understand it, the data analysis capabilities that are now possible and weren’t possible really 10 years ago, are resulting in a bit of a shift to make mass actions more efficient and easier to pursue. Beyond that, I can’t really get into details, because like I said, I don’t have that experience. It’s something I’m hearing a lot about,” Barrett said.
West Virginia’s class action laws are “changing for certain,” Donovan said.
“Our class action law has lagged behind what we’ve seen in the federal courts and what we’ve seen in most other states. Classes are complicated. There are a lot of requirements in the federal rules that the federal courts have been enforcing with increased specificity. Most particularly, the federal courts have been focused on what makes a class action practical and realistic,” Donovan said.
“And what I mean by that is, you know for many, many years, the situation was that a plaintiff in a state like West Virginia could make a prima facie showing that you had thousands of people, that there were some common issues, and more often than not the class was certified based on that alone. And there wasn’t a lot of thought given to the more detailed questions about what happens next: ‘How do we identify the class members? How do we make sure that the class members receive notice that comports with due process rights? How do we make sure that the defendants’ due process rights are observed?’ Because even though the class exists as a mechanism to help plaintiffs get together and resolve their claims efficiently, you can’t trample the rights of the defendant in the process of doing that,” Donovan said.
“And these questions often were sort of pushed to the side, because the reality was, once a class was certified, and you had tens of thousands of class members, and a defendant was facing potential liability for all those claims, the cases almost always settled. And so you often didn’t have to answer those complicated questions about, ‘How do we find the class members and make sure everybody’s rights are observed?’ It’s not uncommon to see 10% claims rates or less in these cases. The other questions that went unanswered were, you know, ‘Look, suppose the case doesn’t settle after the class is certified? How are we actually going to try this?’ In some cases, that’s really easy, right? In the archetypical class action, in the kind of case that, in my opinion, should be certified as a class action, it’s not complicated, because the claims of all the class members are the same or nearly the same,” Donovan said.
“And most importantly, the question of the damages that the class members will receive are the same or nearly the same. And so you can do it the way it ought to be done, which is you have a relatively straightforward trial where you try the claims of the representative plaintiff, and the claims of the rest of the class rise and fall with those of the representative. That’s how it ought to work, those are the cases that should be certified. In those instances, a class action is a great tool,” Donovan said.
“What you see all too often, though, and these are the cases that shouldn’t be certified, where you have tens of thousands of claims that are related in some way, maybe they arise from the same event, but different people were affected in thousands of different ways, there are thousands of different affirmative defenses that can be made, there are thousands of individualized inquiries about damages and pre-existing conditions, and reliance, and it goes on and on and on and on,” Donovan said.
“And so for years and years and years, we’ve seen those cases certified in West Virginia, where there really probably wasn’t a practical way, and a fair way, to resolve the case as a class. But once you had the certification it didn’t matter, because there was a settlement. And what we’re seeing around the country now in the federal courts and in other states, is the courts are really looking very hard to say, ‘We’re going to make sure all these requirements of Rule 23 — that’s the rule both in state and federal court that governs class actions — we’re gonna make sure all these rules and all these requirements are satisfied. And I really think that’s a much more fair, a way to do it for both sides,” Donovan said.
Williams wants to make it very clear that his “frustration with class actions is that oftentimes it is more about generating attorneys fees for the lawyers than it is about providing value to the injured class members.”
“I think class actions serve a legitimate purpose in our system. They are generally designed to allow small claims that would not be able to be brought individually to be collected and resolved all at once. And I think that’s a valuable mechanism that unfortunately has been subject to abuse because a lot of lawyers who have filed these class actions care more about the amount of attorneys fees they’re going to generate than about getting value for the entire class members who are their clients,” Williams said.
Barrett believes there’s going to be a place for class action lawsuits for the foreseeable future.
“Done well, and, by the right people, and overseen by the right judges, class actions are the best way of enforcing laws and getting basically compensation to people who were wronged by violations of the law. At bottom, a class action is about efficiency,” Barrett said.
“It’s much more efficient for one lawsuit to resolve the claims of 10,000 people, than for 10,000 lawsuits to resolve the claims of 10,000 people. So paying attention to the value of class actions in efficiently resolving disputes should mean that class actions will continue to be important and viable,” Barrett said.