Semiannual Guide to Expert Witnesses
April 2005 / $4
E A R N MCLE CR E D I T
of Probate and
Los Angeles lawyer Brad W. Seiling explains how successful
class action lawsuits can result in malpractice claims page 22
New Punitive Damages Tax page 14
Solvent Tenants in Bankruptcy page 18
Trademark Infringement Damages page 36
April 2005 Vol. 28, No. 2
22 Class Wars BY BRAD W. SEILING
In the wake of a recent appellate decision, class counsel may face a greater likelihood
of malpractice claims and attacks on class settlements
29 Tales of Two Courts BY HOWARD S. KLEIN
Family court proceedings may give rise to issues that eventually must be settled in
Plus: Earn MCLE credit. MCLE Test No. 136 appears on page 31.
36 Marked Recovery BY ANTONIO R. SARABIA II
The new provision for statutory damages in trademark infringement cases has already
created a substantial body of case law
41 Special Section
Semiannual Guide to Expert Witnesses
The magazine of
The Los Angeles County
10 Barristers Tips 79 Computer Counselor
Invoking the procedure for judicial Technology trends affecting the practice
disqualiﬁcation of law
BY GAVIN HACHIYA WASSERMAN BY GORDON ENG
14 Practice Tips 84 Closing Argument
Assessing the impact of the new law on A Washington fable for our time
punitive damages BY KEITH PAUL BISHOP
BY JAMES J. FARRELL AND JEREMY G. SUITER
18 Practice Tips
Filing bankruptcy by solvent tenants to cap 82 Index to Advertisers
Cover photograph by Tom Keller
BY DAVID S. KUPETZ 83 CLE Preview
To ward off objectors, class counsel may solicit the guidance of
judges and mediators in the settlement process
by Brad W. Seiling
funny thing hap- the class’s recovery, even though those claims Janik poses for class action settlements, it is
pened to a law were not part of the trial court’s certiﬁca- useful to understand how the court of appeal
ﬁrm on the way to tion order. Janik appears to be the first could conclude that seemingly successful class
collecting a $90 reported California decision recognizing that counsel potentially breached their duties to the
million judgment class counsel can be liable in malpractice class. The underlying litigation in Janik was
in favor of its cli- based on its successful representation of a cer- one of the seminal cases in the area of wage
ents. One of the tiﬁed class. The duties articulated in Janik and hour law in California. The case involved
clients—a member extend beyond actions for legal malpractice a class action against Farmers Insurance on
of a certiﬁed class and potentially raise a new obstacle to class behalf of more than 2,400 claims adjusters to
of more than 2,000 insurance claims settlements. recover nonpayment of overtime wages. The
adjusters—sued the attorneys for malpractice. Class settlements are often criticized and complaint, which was ﬁled in 1996, asserted
The California Court of Appeal has allowed challenged as collusive deals between greedy a single cause of action under the Labor
the claim to proceed as a second putative class counsel out to line their pockets and Code. In 1998, the trial court certiﬁed a class
class action. This recent appellate decision unscrupulous defendants trying to buy an of all claims adjusters who worked for
raises some obvious questions. Where could inexpensive resolution of claims alleging seri- Farmers from October 1, 1993 (three years
these attorneys possibly have gone wrong? ous injury to consumers. The sweeping ratio- prior to the ﬁling of the complaint), to the date
When is a $90 million judgment not enough? nale announced in Janik would apply equally of trial.
The court of appeal’s answers to these ques- to class counsel that settle class claims, even After notice was sent and class members
tions have wide-ranging signiﬁcance in class if they achieve substantial beneﬁts for the were given the opportunity to opt out of the
action litigation. class. Dissatisfied class members (and the
In Janik v. Rudy, Axelrod & Zieff,1 the counsel who represent them) now may attack Brad W. Seiling is a partner in Manatt, Phelps &
court of appeal held that class counsel owed class counsel for breaching duties to a set- Phillips and is cochair of the ﬁrm’s Unfair Comp-
its clients (members of the class in the under- tlement class by selling out the class’s claims etition Practice Group. He specializes in the defense
lying litigation) a duty to consider and assert too cheaply. of class action lawsuits and lawsuits brought under
additional claims that could have increased Before examining the conundrum that the Unfair Competition Law.
Los Angeles Lawyer April 2005 23
class, class counsel successfully moved for exclusive forum to challenge the adequacy of issue presented in Ferguson was whether a
summary adjudication on the ground that class counsel’s representation. The initial stipulated dismissal of punitive damages alle-
the members of the class were not exempt determination of whether counsel were ade- gations as part of an $80 million class set-
from overtime regulations. This favorable quate to represent the class—a prerequisite to tlement constituted malpractice. The supreme
ruling was affirmed on appeal.2 any certiﬁcation order—was very different court held that lost punitive damages were not
A jury then awarded the class approxi- from the determination of whether class coun- recoverable as compensatory damages in a
mately $90 million in unpaid overtime wages, sel actually adequately represented the class legal malpractice action, but the court did not
and that judgment was affirmed on appeal.3 throughout the litigation. The trial court in analyze the scope of class counsel’s duty to
Class counsel had won a substantial award for the underlying class action never considered members of the class. Janik expressly states
the class and in the process had made new law whether class counsel had adequate reason to what may have been implied in Ferguson—
in the area of wage and hour class actions. forego asserting a UCL claim.6 class counsel can be held liable for failing to
These results would not seem to support a There were many good reasons why the pursue claims on behalf of a class.
malpractice case, but that is exactly what attorneys chose not to risk asserting a UCL In addition to recognizing new potential
happened next. claim after obtaining favorable rulings on liability for class counsel, Janik also has
After the trial, a second putative class certiﬁcation and summary adjudication on lia- potentially broad implications for class action
filed a malpractice suit alleging that class bility. When counsel ﬁled their original com- settlements. Commentators and courts have
counsel breached their duties to the class by plaint in 1996, it was not clear whether back expressed concerns that class action settle-
failing to assert a claim under California’s wages were recoverable as restitution under ments offer an opportunity for attorneys to
Unfair Competition Law, codiﬁed at Business the UCL. Cortez v. Purolator Air Filtration generate fees without any effective monitor-
and Professions Code Section 17200 et seq., Products Company,7 the California Supreme ing by class members, particularly when the
which carries a four-year statute of limitations Court’s decision recognizing that unpaid settlement has been reached prior to class
period—one year longer than the limitations wages could be recovered as an item of resti- certiﬁcation.12
period under the Labor Code. By not amend- tution under the UCL, was decided in 2000, There also is concern that defendants may
ing the complaint to assert a UCL claim, after the trial court had certiﬁed the class in use the settlements to buy their way out of
class counsel allegedly deprived the class of the underlying litigation. Class counsel did not serious situations in a relatively nominal way
millions of dollars of additional unpaid wages. believe that it was even possible to amend the or to structure settlements to achieve a
The trial court sustained the attorneys’ complaint to assert a claim recognized by “tremendous sales bonanza” for themselves
demurrer without leave to amend and dis- the Cortez decision, and counsel certainly while providing little relief to the settlement
missed the malpractice action. The demurrer would not have wanted to risk reopening class.13 This criticism applies particularly to
contended that the trial court’s certiﬁcation the issue of certiﬁcation or to otherwise jeop- coupon settlements, which require class mem-
order in the underlying litigation proscribed ardize their favorable rulings on the merits.8 bers to redeem coupons for the defendant’s
the bounds of any duty the attorneys owed to Notwithstanding the “sound strategic rea- products in order to realize the beneﬁts of the
the class, and unnamed class members had no sons for not seeking to amend the complaint settlement.
right to demand that class counsel assert after the Supreme Court decided Cortez,” A new legal subspecialty has developed in
additional claims.4 the Janik court held that whether such tacti- recent years: lawyers who make a living rep-
The court of appeal reversed, ﬁnding that cal decisions amount to a breach of a class resenting class members who challenge the
the plaintiff had stated claims for negligence counsel’s duties to the class presents a ques- settlements of their class actions.14 These
and breach of fiduciary duty. The court tion of fact that could not be resolved on attorneys insist on modiﬁcations to settle-
rejected the attorneys’ argument that their demurrer.9 ment terms as well as fees for themselves in
duty to the class was limited to competently exchange for their clients’ decision to drop
prosecuting the claims that the court certiﬁed. Sweeping New Duty their objections to ﬁnal approval of the set-
Class counsel, like all attorneys, have a duty The court’s rationale confirms the central tlement. Clearly, “objecting has become big
to at least consider and advise their clients of role that the UCL plays in consumer litigation. business.”15
related matters that could be pursued to UCL claims are common in consumer class Dealing with these objections can be
avoid prejudice to the client: action cases, even if the comparatively limited extremely costly, particularly if the trial court
In the context of a class action, both remedies available under the UCL (particu- permits discovery into the settlement process
the representative plaintiffs and the larly the limited monetary remedies in light and the terms of the settlement.16 Litigating
absent class members similarly are of recent California Supreme Court rulings) challenges to settlements delays ﬁnality for
entitled to assume their attorneys will mean that a UCL claim adds little to a class’s defendants and usually puts a hold on any
consider and bring to the attention of potential recovery. That a plaintiff can take award for attorney’s fees. For that reason,
at least the class representatives addi- advantage of the four-year statute of limita- defense counsel and class counsel regard
tional or greater claims that may exist tions under the UCL in itself would justify objectors and their lawyers as expensive nui-
arising out of the circumstances under- asserting a UCL claim in almost every con- sances who threaten to derail settlements
lying the certified claims that class sumer case. Indeed, in light of Janik, plaintiff’s that required countless hours to achieve.
members will be unable to raise if not lawyers act at their peril if they do not allege In their defense, settlement objectors often
asserted in the pending action. The a UCL claim in a class action lawsuit. achieve beneﬁcial modiﬁcations to class set-
class members are entitled to assume Underscoring the importance of the UCL is tlements or derail settlements that courts ulti-
their attorneys are attempting to max- nothing new.10 mately concluded were not in the interests of
imize their recovery for the conduct What is new is the sweeping new duty that the class.17 In these cases, the objectors raise
they are challenging and that they are the court of appeal imposed on class counsel. issues that may not otherwise have been pre-
not, without good reason, failing to The California Supreme Court previously sented to or considered by the trial court in rul-
assert those claims that will do so.5 had considered a malpractice case against ing on a stipulated application for settlement
The court of appeal also rejected the argu- class counsel in Ferguson v. Lief, Cabraser, approval.18 Regardless of how one regards set-
ment that the class action litigation was the Heiman & Bernstein LLP.11 However, the tlement objectors, they are here to stay.
24 Los Angeles Lawyer April 2005
Janik provides a new angle for attorneys the parties submitted the matter to a respected is often very difficult for defendants. Clients
seeking to challenge class action settlements. independent mediator in itself is frequently want to know the bottom line, and in class
An argument that a proposed settlement is not cited as a factor in favor of approving class action settlements, the plaintiffs’ attorney’s
fair and reasonable to the settlement class settlements.22 fees award forms one of the most signiﬁcant
would support a malpractice claim against Negotiate fees after substantive terms. components of the bottom line. Both sides
class counsel as well as a direct challenge to Whether the parties negotiate the settlement may be reluctant to engage in protracted set-
the settlement. There is no reason to think that between themselves or retain a mediator, the tlement discussions without addressing a
future class members—and the counsel who substantive terms of the settlement—class material term. But rushing to deal with fees
represent them—will not use Janik’s rationale deﬁnition, form and content of class notice, first or tying an agreement to substantive
to challenge class settlements. consideration to the class members, proce- terms to a particular fee award may expose
the settlement to chal-
Protecting Class lenge (or at a mini-
Settlements from mum, close scrutiny by
Attack the trial court).
There are many ways for Submitting the
counsel to protect class question of fees to the
settlements from collat- trial court eliminates
eral attack. Of course, any argument regard-
no single step—or even a ing collusion. While the
combination of steps— taint of collusion evap-
will insulate a settlement orates, plaintiffs’ coun-
from collateral attack or sel and defense counsel
ensure its approval. often are unwilling to
Ultimately, whether a set- place this important
tlement survives and issue entirely in the
class counsel can avoid hands of a neutral third
malpractice liability party. In a settlement,
depends on the fairness defendants can cap
of the settlement to the their exposure for fees,
class.19 Class members but they have no such
will have no basis to assurances if they allow
complain if the settle- the trial court to decide
ment is fair and has not the issue entirely.
caused the relinquish- Conversely, class coun-
ment of any substantial sel may prefer the cer-
legal rights without ade- tainty of knowing that
quate justification. The the defendant will not
following are effective oppose its fee request
ways to enhance the to having to litigate its
chances of defeating any entitlement to fees.
attack on a class action There are ways to
settlement. reduce the risks to both
Use a mediator. Using a sides of submitting the
mediator to oversee set- fee issue to a third party
tlement negotiations adds for resolution. For
a layer of protection for the interests of class dures for redeeming consideration, and example, a baseball-style arbitration proce-
members and thus undercuts a claim that injunctive relief (for example, requiring dure may be appropriate. In this procedure,
the settlement was collusive. The trial judge changes in the defendant’s business prac- each side presents one number for consider-
may feel more comfortable approving a set- tices)—should be the ﬁrst order of business. ation, and the judge or arbitrator must select
tlement that has been mediated before a neu- The issue of attorney’s fees should not be one of the two numbers. Alternatively, each
tral third party, particularly if the mediator is placed on the table until after the substantive side could propose a number that forms the
one whom the trial judge knows and respects. terms have been resolved. range between which the fee award will fall.
Courts have cited the parties’ use of a medi- Attorney’s fees often are one of the most If the trial court is unwilling to resolve these
ator as a factor in ﬁnding that a class settle- controversial components of a class settle- issues, the matter could be referred to a third
ment was fair, reasonable, and not collusive.20 ment, and a substantial stipulated fee award party for determination. Regardless of the
There are limits to how much mileage the can provide a tempting target for settlement procedure, placing the issue of fees into the
parties can get from using a mediator. objectors or malpractice plaintiffs attacking hands of a third party makes it much more
Declarations from the mediator describing the the settlement as a sellout of the class by difficult for an objector or malpractice plain-
mediation process or opining on the fairness class counsel. The mediator’s presence can tiff to sell the argument that class counsel
of the settlement may not be admissible in any undercut these arguments and underscore breached duties to the class in favor of their
subsequent proceedings.21 Indeed, the medi- the adversarial nature of the settlement own fees.
ator may not even be willing to provide such process. Don’t skimp on class notice. Preparing a
a declaration. Even without a statement of Waiting to negotiate class counsel’s fees comprehensive class notice can also protect
support from the mediator, the mere fact that until the substantive terms have been resolved the settlement and class counsel from collat-
Los Angeles Lawyer April 2005 25
eral attack. Here is where defense counsel can attorneys may seek guidance from the ﬁndings generally recite the requirements for
be helpful. Many defendants try to cut cor- court.”28 There is absolutely no reason not to settlement approval without delving into spe-
ners on class notice to save potentially sub- heed that advice. ciﬁc issues. That is perfectly understandable
stantial costs.23 Other defendants hope to Parties should inform the trial court of because most class settlement approval hear-
minimize the response rate and thus reduce their settlement negotiations and the para- ings proceed without opposition or objec-
the ultimate payout. These are short-sighted meters of the settlement terms they are con- tion. Those general ﬁndings may not, how-
concerns that could threaten the settlement. sidering. This approach brings the trial court ever, satisfy a subsequent court faced with a
The notice is often the ﬁrst and only time into the settlement process—even if the trial malpractice action against class counsel.
the class receives any information about the judge is not actually mediating the case— For that reason, class counsel should put
case or the settlement. Courts have adopted and may enhance the likelihood of approval. themselves in the shoes of an objector or
ﬂexible standards for determining whether The judge may even spot issues that could pre- potential malpractice plaintiff and consider
class notice is adequate. In general, notice sent problems when the settlement is ready for what aspects of the settlement might raise con-
must be given in a manner that has “a rea- approval. cerns in a subsequent collateral attack. Those
sonable chance of reaching a substantial per- Some trial judges may be reluctant to issues should be presented to the trial court
centage of the class members.”24 The notice offer what might be regarded as advisory in the settlement approval papers and at the
should be as broad as possible to avoid sub- rulings on matters that are not properly before preliminary and final settlement approval
sequent charges that the class did not receive them on a noticed motion or other recognized hearings. Draft final approval orders also
adequate notice of the rights they were relin- procedure. The federal Manual for Complex should include speciﬁc ﬁndings on these issues.
quishing. The notice should be sent in a way Litigation suggests that on occasion “a judge Encourage objectors to speak now or forever
that is most likely to reach members of the set- might retain a special master or a magistrate hold their peace. Potential objectors often con-
tlement class. judge to examine issues regarding the value tact counsel to raise their concerns with a pro-
Personal notice, if practicable, is always of nonmonetary beneﬁts to the class and their posed settlement before ﬁling formal objec-
the best form of notice—both to satisfy due fairness, reasonableness and adequacy,”29 tions. It may be tempting for the proponents
process concerns and to insulate the settlement although such appointments are rare.30 of a class settlement to ignore these objectors
from collateral attack. Posting the notice on Trial courts are supposed to act as “ﬁdu- and hope they simply go away. The better
a company’s Web site or publishing the notice ciaries” of absent class members.31 Disclosing course is to insist that any objector submit for-
in newspapers or magazines have been rec- the reasons why counsel seeks guidance from mal objections to the trial court and appear
ognized as valid means of notice and may con- the court and appealing to the court’s unique at the ﬁnal approval hearing.
tribute to insulating a settlement from col- role as protector of the interests of absent class Res judicata and collateral estoppel prin-
lateral attack.25 members may dispel some of the reluctance ciples apply to judgments in class action
The contents of the notice are also impor- of courts to get involved. Citing Janik also cases,33 including judgments that result from
tant in avoiding subsequent challenges. may be compelling. Concerns about the trial class actions settlements.34 Objectors who
“[N]otice given to class members must fairly court’s willingness to provide settlement guid- have appeared and had their concerns con-
apprise members of the terms of the pro- ance should not, however, dissuade counsel sidered and addressed by the trial court in the
posed compromise and of the options open from making the inquiry. Counsel who refrain underlying class action case will have a dif-
to dissenting class members.”26 All class from asking for the trial judge’s help may ﬁcult time relitigating the same issues in a sub-
notices briefly describe the nature of the never know what the judge is thinking until sequent malpractice case.35 Indeed, the ﬁnd-
action and the settlement terms. In light of it is too late. ings against them should serve as collateral
Janik, settlement notices also should describe Request detailed ﬁndings from the trial court. estoppel and bar relitigation of those same
any claims that are not being pursued or that Counsel should request speciﬁc ﬁndings from objections in a subsequent action.36
the class could pursue but for the settlement. the trial court concerning the fairness of the
If possible, the notice should set forth the settlement, the adequacy of class counsel’s rep- Malpractice and Other Concerns
reasons why these claims are not being pur- resentation, the lack of collusion in the set- The appropriate response to a malpractice
sued. Providing this detail will make any tlement process, and the decision not to pur- action ﬁled before ﬁnal approval of a class set-
challenge to the settlement more difficult sue certain claims or forms of relief in tlement is to seek an immediate stay or dis-
because class members will have been advised exchange for the settlement. These ﬁndings missal of that action on the basis of another
of the rights and claims that they relinquished could be used in a subsequent action as col- action pending. While such a contempora-
under the settlement. lateral estoppel. Indeed, the Janik court sug- neously ﬁled malpractice action likely is pre-
Involve the trial court in the process. Trial gested that such rulings could serve as a com- mature, the case will ripen once judgment is
courts—particularly judges in the complex plete defense to a subsequent malpractice entered approving the settlement. The trial
civil departments throughout the state—take action: “If the issue on which the malpractice court in the malpractice action should be
an active role in class litigation to protect complaint is based has been considered and apprised that counsel appears to be engaged
the rights of absent class members. Court determined in the class action proceedings, the in forum shopping and should be forced to lit-
oversight of settlements protects class mem- rulings of the class action court will be bind- igate the concerns in the context of settlement
bers “whose rights may not have been given ing on the members of the class and preclude approval.
due regard by the negotiating parties.”27 This reconsideration of those matters in another Most class settlements provide that the
action by the court may provide an early line forum.”32 trial court will retain jurisdiction over enforce-
of defense to any collateral attack on a class Of course, asserting this defense assumes ment of the settlement. In light of Janik, pro-
settlement. In fact, the Janik court encouraged that the class action court made the requisite ponents of a class settlement should ask the
class counsel to enlist the trial court to resolve ﬁndings. Existing class action procedures— trial court to retain jurisdiction over collat-
questions about the scope of its duties to the both at the certiﬁcation stage and the settle- eral challenges to matters related to the set-
class: “If class counsel has any question con- ment stage—require courts to examine the tlement. That would provide a basis to trans-
cerning the course that is required by the adequacy of class counsel’s representation of fer any subsequent malpractice case to the
duty it owes to absent class members, the the class. More often than not, the trial court’s same judge who approved the settlement in
26 Los Angeles Lawyer April 2005
the first place. The judge who found that
class counsel adequately represented a set-
tlement class and approved the settlement
may be much less inclined to allow a mal-
practice action to proceed than a judge con-
sidering the matter for the ﬁrst time.
Janik is not merely a problem for the
plaintiffs’ bar. It is undoubtedly tempting for
the defense bar to savor a case that exposes
their adversaries to lawsuits by disgruntled
clients. This may seem to be a welcome pay-
back for all of the times defense counsel has
had to deal with disgruntled clients com-
plaining about the costs of class action liti-
gation and settlements. Nonetheless, this view
is shortsighted. Any vehicle that opens the
door to challenges to class action settlements
ultimately will affect defense counsel and the
clients they represent in class action settle-
Anita Rae Shapiro
Another unintended impact of Janik may SUPERIOR COURT COMMISSIONER, RET.
be to increase class settlement demands.
Plaintiffs’ counsel may seek to insulate them-
PRIVATE DISPUTE RESOLUTION
selves from subsequent attacks by demanding PROBATE, CIVIL, FAMILY LAW
higher amounts in settlements and refusing to PROBATE EXPERT WITNESS
enter into settlements that do not provide
relief to every class member. Coupon settle- TEL/FAX: (714) 529-0415 CELL/PAGER: (714) 606-2649
ments, which many defendants like but which E-MAIL: PrivateJudge@adr-shapiro.com
have been criticized by courts and commen-
tators, may fall further out of favor because FEES: $300/hr
their low redemption rates may leave large
numbers of class members with a reason to
complain about the settlement.
Settling a class action lawsuit is never
easy. Class counsel and defense counsel must
ﬁrst deal with each other in contentious nego-
Coming this June in Los Angeles Lawyer
tiations that often follow protracted litigation.
They must face the trial court twice, ﬁrst at Lawyer-to-Lawyer Referral Guide
the preliminary approval hearing, then at the
ﬁnal approval hearing. During that process, For listing or advertising information, call 213.896.6507
they also may have to deal with objectors. Deadline: April 25th
Now, there is the possibility of contempora-
neous or subsequent malpractice lawsuits.
Counsel negotiating class settlements owe
a duty to each other to make sure that the set-
tlement is not subject to collateral attack.
Working together to structure a settlement
and a settlement process may ensure approval
of the settlement and insulate it from collat-
eral attack. At the end of the day, no one
wants to face the $90 million question. s
1 Janik v. Rudy, Axelrod & Zieff, 119 Cal. App. 4th Office
2 Bell v. Farmers Ins. Exch., 87 Cal. App. 4th 805 space to
3 Bell v. Farmers Ins. Exch., 115 Cal. App. 4th 715
4 Janik, 119 Cal. App. 4th at 936.
5 Id. at 941-42.
6 Id. at 945-46.
7 Cortez v. Purolator Air Filtration Prods. Co., 23
Cal. 4th 163 (2000).
8 Janik, 119 Cal. App. 4th at 946-47.
9 Id. at 947.
10 Since November 2, 2004, no discussion of the UCL For information, call (310) 540 -1771 • $1,350 without phone or secretary
Los Angeles Lawyer April 2005 27
is complete without referring to Proposition 64—the (Judge Posner observed that class settlements, which are not have the power to sanction an attorney appearing
voter initiative that changed the previously broad often presented to the class as a fait accompli, pose sig- on behalf of a client as a vexatious litigant. Id. at
standing provisions under the UCL. With the passage niﬁcant problems for abuse because “lawyers for the 1196. See also In re Mexico Money Transfer Litig., 164
of Proposition 64, plaintiffs must have suffered an class, rather than the clients, have all the initiative F. Supp. 2d 1002 (N.D. Ill. 2001), aff’d, 267 F. 3d 743
injury in fact as well as a loss of money or property in and are close to being the real parties in interest….”). (7th Cir. 2001) (Dissident attorney who objected to set-
order to sue a defendant for violation of the UCL. 13 In re General Motors Corp. Pick-Up Truck Fuel tlement solicited more than 90% of all opt outs.).
Proposition 64 also eliminated the ability of private par- Tank Prods. Liab. Litig., 55 F. 3d 768, 787 (3d Cir. 15 ALBA CONTE & HERBERT NEWBERG, 4 NEWBERG ON
ties to represent others unless the parties comply with 1995) (Third Circuit found that district court abused CLASS ACTIONS §11.55, at 168 (4th ed. 2002).
class action procedures. Practitioners should note that its discretion in approving the class settlement because, 16 See In re General Motors Corp. Engine Interchange
Proposition 64 actually makes Janik even more impor- among other reasons, the coupon settlement did not Litig., 594 F. 2d 1106 (7th Cir. 1979) (holding that trial
tant in UCL litigation. Since class action procedures will provide adequate value to class members.). court abused its discretion by not permitting objectors
apply to any UCL suit prosecuted on behalf of others, 14 See Weissman v. Quail Lodge Inc., 179 F. 3d 1194 to conduct discovery to show that settlement prejudiced
the duties articulated in Janik potentially apply to all (9th Cir. 1999). In Weissman, the Ninth Circuit reversed interests of the class); see also 4 NEWBERG ON CLASS
suits brought under the UCL. a district court order prohibiting an attorney from ACTIONS, supra note 15, §11.57 (detailed discussion on
11 Ferguson v. Lief, Cabraser, Heiman & Bernstein LLP, objecting to class action settlements. The district court an objector’s right to independent discovery).
30 Cal. 4th 1037 (2003). characterized the attorney as “something of a class 17 See General Motors Corp. Pick-Up Truck Fuel Tank
12 See Mars Steel Corp. v. Continental Ill. Nat’l Bank action settlement gadﬂy.” The Ninth Circuit reversed Prods. Liab. Litig., 55 F. 3d 768.
& Trust Co., 834 F. 2d 677, 678 (7th Cir. 1987) the restrictive order on the ground that trial courts do 18 See Shaw v. Toshiba Am. Info. Sys., Inc., 91 F.
Supp. 2d 942, 974-75 (E.D. Tex. 2000) (ﬁnding by dis-
trict court that objectors’ counsel had conferred a sub-
stantial beneﬁt on the class by extending the coupon
redemption period from 180 days to one year).
19 Officers for Justice v. Civil Serv. Comm’n, 688 F. 2d
615, 625 (9th Cir. 1982). In class action litigation,
California courts routinely look to federal authority for
guidance. Vasquez v. Superior Court, 4 Cal. 3d 800,
20 Wershba v. Apple Computer, Inc., 91 Cal. App.
4th 224, 245 (2001).
21 See Foxgate Homeowners Ass’n, Inc. v. Bramaela
Cal., Inc., 26 Cal. 4th 1 (2001) (holding that statements
from a mediator regarding a party’s conduct during
mediation proceeding were not admissible in connec-
tion with a motion for sanctions).
22 See Rebney v. Wells Fargo Bank, 220 Cal. App. 3d
1117, 1139 (1990); Dunk v. Ford Motor Co., 48 Cal.
App. 4th 1794 (1996).
23 See, e.g., In re Lorazapem & Clorazepate Antitrust
Litig., 205 F.R.D. 369 (D.D.C. 2002) (The court
reported total notice costs of $8.250 million for a
class that included more than 1.2 million members.).
24 Cartt v. Superior Court, 50 Cal. App. 3d 960, 974
25 Wershba, 91 Cal. App. 4th at 251 (upholding class
notice as adequate under circumstances in which defen-
dant mailed or e-mailed notice to class members, pub-
lished notice in USA Today and MacWorld, and posted
notice for more than 30 days on its Internet Web site).
26 Trotsky v. Los Angeles Fed. Sav. & Loan Ass’n, 48
Cal. App. 3d 134, 151-52 (1975).
27 Officers for Justice v. Civil Serv. Comm’n, 688 F. 2d
615, 624 (9th Cir. 1982).
28 Janik v. Rudy, Axelrod & Zieff, 119 Cal. App. 4th
930, 946 (2004).
29 MANUAL FOR COMPLEX LITIGATION, FOURTH 329
(Federal Judicial Center 2004); available at
30 THOMAS E. WILLGING ET AL., EMPIRICAL STUDY OF
CLASS ACTIONS IN FOUR FEDERAL DISTRICT COURTS 64-
65 (Federal Judicial Center 1996).
31 7-Eleven Owners for Fair Franchising v. Southland
Corp., 85 Cal. App. 4th 1135, 1151 (2001).
32 Janik, 119 Cal. App. 4th at 946.
33 Daar v. Yellow Cab Co., 67 Cal. 2d 695, 706
(1967); Payne v. National Collection Sys., Inc., 91
Cal. App. 4th 1037, 1047 (2001).
34 Citizens for Open Access to Sand & Tide, Inc. v.
Seadrift Ass’n, 60 Cal. App. 4th 1053, 1065 (1998).
35 See, e.g., Mortimer v. River Oaks Toyota, 278 Ill.
App. 3d 597 (1996) (Plaintiffs who objected but did not
opt out were subject to the preclusive effect of the
judgment in a settled class action.).
36 See In re Bridgestone/Firestone, Inc. Tires Prods.
Liab. Litig., 333 F. 3d 763 (7th Cir. 2003) (A ﬁnding
that nationwide class was inappropriate acted as col-
lateral estoppel in state court proceedings.).
28 Los Angeles Lawyer April 2005