Mediating Class Actions

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There comes a time in many class actions when the parties agree to mediate.  It doesn't happen in all cases.  The decision whether to settle (the goal of mediation) may be a matter of timing:  often, defendants will test their dispositive motions first, or wait to see whether the case is certified.  But the decision may transcend issues of timing.  Not every case should be settled, and there may be compelling business or pragmatic reasons why a defendant would be ill-advised to do so.  Even cases that should be settled sometimes can't be settled because of the unreasonable demands of plaintiffs' counsel.  Ultimately, the decision to settle is a business decision that can only be made by the client, preferably informed by the advice of experienced class action defense counsel, but ultimately based on factors best understood by inhouse counsel and the business people whom they serve.

Like class litigation, the mediation of class actions, either pre-certification or post-certification, is more complicated than the mediation of individual cases.  Here are a few tips for making the most of the experiience.

  1. Choose the right mediator.  Not all mediators have class action experience.  While the lack of such experience should not be a disqualifier, because of the procedural peculiarities of class settlements, it can be an important factor in selecting a mediator.  Other important characteristics for class action mediators are patience, experience resolving (or, if the mediator is a retired judge, adjudicating) complex business disputes, the ability to stay organized with respect to settlements and settlement proposals that contain many variables, and the absence of any perceived biases or predilections.
  2. Don't waste time arguing the merits.  This is not to say that merits discussions have no role in class mediations; they do.  But they should not occupy the same amount of time as they do in individual mediations.  Merits arguments are generally addressed in two ways at mediation:  in the written submission each side provides the mediator before the mediation, and in an oral presentation during a joint session at the mediation.  And there three audiences that each party wants to reach in these two formats:  the mediator, opposing counsel, and the opposing counsel's client (nominally, the ultimate decision-maker).  What sets class mediations apart is that the named plaintiffs' role in the decision making is diminished because they are not the only beneficiaries of the settlement, and they typically don't even attend the mediation.  That leaves only the mediator and opposing counsel as the target audiences for merits arguments, but they will already know your arguments before the mediation begins.  Of course, it may be necessary to remind these players of the weaknesses of your opponent's case from time to time, but time spent in a joint session to impress your opponent, or your client, with your effectiveness as an advocate is time taken away from the more pressing matters of how to get the matter settled.
  3. Anticipate objections.   If you are able to arrive at a class settlement, you will need to have it approved by the trial court, and if there are objectors, you may also need to have it approved by an appellate court.  It takes a lot of time and money to get from the mediation to final approval of the settlement, and the last thing you want is to have the settlement rejected after all of the time and resources you and your client have devoted to it.  It is therefore important to enter the mediation with a good understanding, both from experience and from familiarity with precedent, about what objections the settlement might invite so that you can structure the settlement to avoid them.  Careful attention to such issues as the value provided to absent class members, the fairness with which they are being treated, avoiding excessive service fees to named plaintiffs or disproportionate attorneys' fees to class counsel, and the quality and manner of notice and procedural rights afforded absent class members can help to craft a settlement that will survive objectors' challenges.