I read an interesting article in the Morrison & Foerster blog the other day about a case where a class was de-certified because it appeared there was a problem with the lawyers for the class. As the blog post notes, defense counsel must always be looking for a way to terminate (i.e. dismiss) the case, even after conditional certification is granted and a settlement is expected by the plaintiff’s lawyers. In this case, the Court became concerned when it became aware that the plaintiff’s lawyer did not appear interested any longer in taking the case to trial. The case is entitled Jin v. Shanghai Original, Inc. et al and issued from the Second Circuit Court of Appeals.
In Jin, the workers sued for overtime, alleging both FLSA and New York State violations. The district court conditionally certified a class under Rule 23 and designated John Troy of Troy Law, PPLC as class counsel. Then, a few days before trial, the lower court Judge, on his own initiative, decertified the class, finding that the lawyer was no longer an adequate advocate for the workers. The Court cited “numerous red flags” that had surfaced, such as the lawyer’s failure to investigate his own assertions that the employer had convinced class members to opt out as well as his persistent failure to submit a joint pretrial order that was not deficient under the Judge’s rules. The Judge was also concerned that the lawyer only planned to call two class members to testify and deemed this a “significant intervening event” that militated decertification. The Judge noted that many payroll and other records were missing so that the testimony would be “critical” to the prosecution of the plaintiffs’ case.
The Second Circuit agreed with the Judge. The Court agreed that the lawyer “was no longer adequately representing the class.” The court stated that “Rule 23(g) requires courts to consider several criteria, including counsel’s efforts investigating the claims, experience with class actions, knowledge of the area of law, and resources.” Significantly, the Court also opined that lower courts do not need to see a “significant intervening event” to determine that certification as a class is no longer appropriate.
The Court focused on the concept of adequate or inadequate representation of the class members’ counsel. The decision highlights the rather “basic” concept that class counsel must from the start, to the end, of the litigation be zealous in his representation of his clients and cannot take the easy way out. The Second Circuit did not address the issue of what happens if the defendant sought to decertify a class. The Court observed that “the issue of whether a significant intervening event or a similar type of showing might be appropriate when a defendant moves to decertify is not before us, we do not address this issue.”
In some ways, this case was a fluke. I have defended numerous Rule 23 actions and have never (except for maybe once) thought about trying to de-certify a class for inadequacy of counsel (because they have been, honestly, pretty good). If, however, defense counsel sees an opportunity to de-certify when this kind of a “gift” is handed to him/her, they should seize upon it. Decertify. As the Morrison authors note, this case demonstrates that, at any time, defense counsel should be looking for signs that the class is no longer appropriate under Rule 23.
Keep looking for a way out…