A 10-Point Response Plan

The company was just sued in a putative class action. Now what? The following 10-point response plan broadly outlines the initial steps to implementing a comprehensive class action defense, recognizing that there is no one-size-fits-all defense plan and each one of the steps entails sophisticated legal analysis.         

1. Assess “the case.” Identify the crux of the claim, the core facts, the key documents and agreements, and the potential exposure of the company. Assess whether the company needs to take immediate action for purposes of liability, accrual of purported damages, and/or adverse publicity. Interview employee-witnesses and communicate with important third parties. Analyze the facts and any unique defenses that pertain to the named plaintiff’s claim and alleged injury. Explore possible counter and third-party claims, including as a component of the class action defense. Develop a working defense theory in light of governing principles of law. Identify the universe of potentially relevant documents and electronically stored information and implement a litigation hold. Conduct the preliminary investigation under the auspices of in-house or outside counsel.
2. Investigate insurance coverage and provide notice. Put insurers on notice and, in appropriate circumstances, tender the defense to potentially responsible third parties. Identify internal reporting and disclosure obligations.
3. Determine the appropriate court. If the case is pending in state court, analyze whether it can be removed to federal court. Assess the implications and consequences of removal, including the possibility in state court of an interlocutory appeal of the court’s ruling on class certification. Implement a plan to establish the amount in controversy and other Class Action Fairness Act prerequisites within the 30-day time for a notice of removal and as could be necessary to defend a motion to remand. In this regard, keep in mind that the removing party bears the burden of establishing the federal court’s subject matter jurisdiction, which is a counterintuitive inquiry and might require in-depth analysis of records and data. If the case was filed in federal court, assess the risks of a show cause order to establish that the federal court possesses subject matter jurisdiction. Analyze whether the venue is proper.     
4. Retain defense counsel. The selection of outside counsel is a critical component of the response plan and implicates a myriad of considerations. As part of the process, prepare and/or analyze a detailed preliminary defense plan.       
5. Develop a preliminary defense plan. In the context of governing principles of law, develop the points for a motion to dismiss based on legal defenses (e.g., statute of limitation, privity, economic loss rule), the terms of any agreement or contract (e.g, arbitration clause or limited warranty), the named plaintiff’s standing (concrete injury), heightened pleading standards (e.g., fraud), potential leverage points (e.g., statutory fee-shifting or enhanced damages), and Twombly-Iqbal pleading deficiencies. Explore a motion to strike or dismiss the class action allegations on the basis that the allegations fail as a matter of law under Civil Rules 12 and 23. Assess the principal facts and issues for the defense of class certification, focusing on elements of the claims for which there is no common, class-wide proof. For example, were the members of the putative class allegedly injured, and if so on a uniform and across-the-board basis? Analyze the class definition, including for temporal limits, geographic scope, and whether the purported class members are readily ascertainable based on objective records or instead whether membership in the class is based on a series of individualized adjudications (e.g., individuals who were “injured”). Devise an approach to build out the comprehensive defense to class certification, developing the record evidence (documents, deposition testimony, declarations, and expert opinions) as if to affirmatively prove, at the trial court level and on a prospective appeal, that the class should not be certified. Propose a strategic case management plan implementing a limited scope of discovery, phased discovery, or summary judgment motions directed to dispositive issues of law in advance of class certification proceedings.      
6. File a motion to stay discovery. Prepare and file a motion to stay discovery pending the court’s decision on the motion to dismiss. Alternatively, try to work with opposing counsel to reach an agreement regarding preliminary or staged discovery proceedings.   
7. Identify experts. Identify potential experts to defend class certification, liability, and damages.   
8. Establish lines of communication. Establish lines of communication between the defense team and client, and coordinate responsibilities under the response plan. Also establish lines of communication with opposing counsel and seek agreement on basic procedural matters.       
9. Analyze exit strategies. Assess the nature and timing of litigation exit strategies and off-ramps. In addition to motion practice, is a creative litigation or settlement structure appropriate in light of the case prospects and defense costs? Assess the adverse party’s pressure points and the means to exploit them. Consider using early Rule 408 disclosures to show flaws or weaknesses in the adverse party’s case, including as to individualized issues of fact or the amount of potential aggregate damages.    
10. Assess collateral risks. Evaluate whether the litigation presents a risk of regulatory investigation or oversight, copycat filings in other jurisdictions, or adverse publicity, and develop appropriate response or contingency plans.

Ultimately, the trial court will exercise broad discretion in deciding whether to certify a class. Courts will consider whether a discrete universe of individuals was truly harmed by improper conduct and, if so, whether the class action can be fairly and efficiently adjudicated to conclusion.    

It is important that each step in the litigation process fit within the overall context of the defense. Encapsulating decades of collective experience, this 10-point response plan lays out a process that is essential to developing a comprehensive class action defense.