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26th National Forum on Wage & Hour Claims and Class Actions

Timothy J. Long

Partner

Orrick, Herrington & Sutcliffe LLP

Ethical Issues in Wage &Hour Class Action Litigation and Settlement

Trishanda L. Treadwell

Partner

Parker Hudson Rainer & Dobbs LLP

January 28-29, 2016

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Topics to be Covered

•Communicating with class pre- and post-certification

• Impact of new discovery rules on class action litigation

• Settling class, collective, and representative actions

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PRE-CERTIFICATION COMMUNICATIONS

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Pre-certification Communications

Subject to local rules, both sides have an absolute right to communicate with putative class members concerning the case and other matters.

However . . .

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Pre-certification Communications

The Court has the authority to police precertification communications.

Gulf Oil Co. v. Bernard, 452 U.S. 89 (1981)

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Pre-certification Communications

•Must be truthful, not deceptive or misleading.

• This includes omitting material information.

•Cannot infringe on concerted activity or bargaining rights.

•Cannot threaten, coerce, or discourage participation.

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Pre-certification Communications

•Potential remedies for abuse:

• Corrective Notice

• No Further Ex Parte Communications

• Sanctions

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Pre-certification Communications

• Tips:• Advise client in writing about what is permissible to say to

putative class members about the case; no retaliation

• Use a script when interviewing putative class members

• Consider having the individual sign a disclosure statement

• Disclose who you represent and who you do not represent

• Get permission for interview – stress interview is voluntary

• Consider explaining potential impact interview may have on case – e.g., putative class member might be excluded

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POST-CERTIFICATION COMMUNICATIONS

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Post-certification Communications

• Under FRCP 23, rules change dramatically for defendant employers• Class counsel represents all known class members,

unless instructed otherwise

• For collective actions, prohibition on post-cert communication applies after opt-in

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Post-certification Communications

• In all cases, cannot interfere with notice process

• Rules against deceptive, misleading, or coercive communications still apply

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Post-certification Communications

Remember:

You cannot do through your client what you cannot do yourself.

• This extends to advising the client on how to communicate with class members to persuade them not to opt in or to opt out.

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AMENDMENTS TO FEDERAL RULES OF CIVIL PROCEDURE

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The New Discovery Rules

Notable Amendments

1. Less time to serve summons & complaint

• 90 days vs. 120 days

2. More focused definition of what is discoverable

• emphasis on “proportionality”

3. Discovery responses must be specific

• no more boilerplate objections

4. New standards for sanctions for ESI preservation

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The New Discovery Rules

What is discoverable?

• Old Rule: • "relevant to a party's claim or defense" and "relevant"

meant "reasonably calculated to lead to the discovery of admissible evidence"

• New Rule:• “relevant to a party’s claim or defense…” AND

“proportional to the needs of the case”

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The New Discovery Rules

Proportionality Factors:

1. Importance of issues

2. Amount in controversy

3. Relative access to information

4. Parties’ resources

5. Importance of discovery sought

6. Burden vs. benefit

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The New Discovery Rules

Under 16(b)(3), Scheduling Order may now include:

1. Preservation of ESI, which means important to fully understand technology at the beginning (how it works, cost, and burden)

2. “Claw-back” agreements reached under FRE 502

3. Requirement that conference with Court be requested BEFORE moving for a discovery-related order

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The New Discovery Rules

Responding to Document Requests• Amended Rule adds: • State grounds for objection with specificity• Must state party will produce documents or ESI, not

permit inspection• Production “must be completed no later than the time

for inspection specified in the request or another reasonable time specified in the response”

• Make proper and well-supported objections• State whether any responsive materials withheld

based on objection

• Be prepared to provide scope/cost analysis

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The New Discovery Rules

ESI Preservation• Duty to take reasonable steps to preserve ESI

• No sanctions unless:(1) Party failed to take reasonable steps AND

(2) ESI cannot be restored or replaced

• Sanction sufficent to cure any prejudice• Most serious sanctions only permissible if ESI

intentionally lost to deprive other side

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The New Discovery Rules

•Representations to Court• Early statements of value of case should match values

stated during class settlement negotiations

• Costs of discovery

• Client's IT capabilities

•Communications with client• Document document-retention instructions, especially

any decisions not to preserve documents and basis for such decisions

• Hire consultant or expert to understand IT issues

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SETTLING CLASS CASESEthical and Other Considerations to Ensure Approval

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Settling Class Cases

1. Conduct honest, arms-length negotiations• Consider using a mediator

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Settling Class Cases

1. Conduct honest, arms-length negotiations• Consider using a mediator

• If using a mediator, don't forget the mediation privilege

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Settling Class Cases

1. Conduct honest, arms-length negotiations• Consider using a mediator

2. Develop and share damages calculations that fairly represent potential value

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Settling Class Cases

1. Conduct honest, arms-length negotiations• Consider using a mediator

2. Develop and share damages calculations that fairly represent potential value

3. Provide enough information to justify settlement• Consider Confirmatory Discovery

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Settling Class Cases

1. Conduct honest, arms-length negotiations• Consider using a mediator

2. Develop and share damages calculations that fairly represent potential value

3. Provide enough information to justify settlement• Consider Confirmatory Discovery

4. Plan for treatment of certain typical settlement terms

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Settling Class Cases1. Conduct honest, arms-length negotiations

• Consider using a mediator

2. Develop and share damages calculations that fairly represent potential value

3. Provide enough information to justify settlement• Consider Confirmatory Discovery

4. Plan for treatment of certain typical settlement terms

•Fund vs. Claims-Made

•Guaranteed Pay-out

•Scope of Releases (Rule 23 v. Collective Action)

•Confidentiality

•Tax Allocations (incl. employer's portion)

•Notice and Claims Forms

•Deadlines (claims, objections, opt-outs, final approval filing and hearing)

•Class Counsel Fees and Costs (incl. arbitrator)

• Incentive Payments (aka “Service Awards”)

•Settlement administration

•Cy Pres

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QUESTIONS?Answers to be determined