Despite the ongoing COVID-19 pandemic, plaintiffs continue to file class actions, shouldering defendants with potentially massive discovery costs. With the economic slowdown associated with the pandemic, businesses face increased pressure to manage litigation costs like these. One way to manage those costs is to rethink the traditional approach to conducting class action discovery.
Traditionally, courts have bifurcated discovery into class and merits stages based on the notion that narrow class discovery will preserve party resources until and unless a class is certified. However, this benefit often proves illusory as plaintiffs undertake, and courts allow, broad class discovery that substantially overlaps with the merits of the action.[1] After going through a round of often broad discovery, defendants are subjected to another round of merits discovery before briefing summary judgment.
This approach invites wasteful duplication and abuse of Federal Rule of Civil Procedure 30(b)(6) depositions. For example, in class actions predicated on a product defect, what discovery about the commonality of a defect across a purported class can be separated from the existence of that defect?
For a defect to be common, it must exist. But under the traditional approach, plaintiffs in such an action could depose a corporate representative about the common defect, then take another deposition on the existence of the defect itself. In effect, plaintiffs get a second bite at the apple.
In the merits stage, they can correct mistakes made in a class deposition. The same issue occurs in other contexts: In a wage and hour action, a common underpayment allegation depends on individual employees actually being underpaid.
Defendants face several other disadvantages with this arrangement, as it allows plaintiffs to move for class certification on a limited record, eliminates opportunities for early summary judgment motions and leads to duplication when discovery shifts to the merits stage.
On the other side of the coin, a defendant cannot realistically separate discovery from named plaintiffs into class and merits issues. The merits of each named plaintiff’s claim determine the commonality of any liability issues, the typicality of the plaintiff’s claim and the adequacy of the plaintiff as a class representative.
Class certification massively increases potential exposure and gives plaintiffs substantial settlement leverage, even when defendants have strong defenses on the merits.[2] Bifurcated class discovery also means that plaintiffs can strategically limit the record before the court at class certification.[3]
Early class certification decisions made with a limited look at the merits of the case tip the scales in the plaintiffs’ favor without testing their allegations through a summary judgment motion.
A defendant’s options to mitigate this harm still leave the business at a disadvantage: rush to try to produce complete discovery in the class stage or file an early summary judgment motion with its class certification opposition. Neither option provides much assurance of avoiding the merits phase of discovery.
Given these disadvantages, why do corporate defendants and experienced practitioners use the bifurcated discovery approach? The desire to control discovery costs often underlies the traditional approach, but faces the problems described above.
Another reason may be the understandable, but mistaken, belief that Rule 23’s “at an early practicable time” language on when class certification should be decided necessarily means before summary judgment. However, the rule does not impose that inflexible structure.[4] Finally, filing a motion to strike class allegations at the pleading stage can offer an opportunity to eliminate class claims early, but some jurisdictions consider them premature before class certification.[5]
To avoid these problems and their associated costs, businesses facing class actions should consider arguing for a single discovery period covering all issues. This approach allows the court to hear summary judgment before or with class certification, forcing plaintiffs to make a stronger evidentiary showing than a bifurcated schedule would require. A single phase requires an investment in full discovery but eliminates costly duplication and gives defendants an opportunity to prevail on the merits of some or all claims before facing potential class certification.
Defendants should be mindful to use a single discovery period as part of a larger strategy to conduct cost-effective litigation.
First, work on limiting the class definition and weeding out claims early wherever possible. Striking a nationwide class or classes including products the named plaintiffs did not purchase will necessarily limit the scope of any discovery taken later.
Second, set a realistic time period for conducting discovery. Ensure discovery can be completed without giving plaintiffs more time than needed to raise unnecessary discovery disputes.
Finally, use Rule 26 to prevent duplicative or overly burdensome discovery. Discovery requests calibrated for a putative nationwide class covering a whole range of products will be overly broad for a class covering a single product in a single state.
As always, a thorough early investigation of the plaintiffs’ claims is essential to evaluate the best approach given the facts of a particular case. In some situations bifurcation may provide the best chance of success, such as when the named plaintiffs have particularly unique or idiosyncratic claims undermining their adequacy as class representatives.
However, when the merits of plaintiffs’ case are weak, but could support class certification on a limited record, conducting a single phase of discovery and moving for summary judgment early may ultimately save the defendant money and increase the odds of defeating the class action altogether.
