VII. The Special Problem of Class and Collective Actions

• Library: Professional Responsibility in Litigation (ABA) (2016 Ed.)

VII. The Special Problem of Class and Collective Actions

Many capable lawyers devote major portions of their practices to class action litigation. Unfortunately, even lawyers who believe that they understand their ethical obligations when it comes to ex parte communications in litigation find that their obligations are not always clear in class actions. Communication issues become clouded from defense attorneys' perspective because of uncertainties about the existence of an attorney-client relationship between class counsel and putative class members, and are further complicated by timing issues peculiar to class action litigation. From the perspective of plaintiffs' counsel, to even suggest that there are limits on their communications with potential class members may initially appear to be absurd.

The subject of ex parte communications with class members is a murky one. Here rules of civil procedure and professional responsibility uniquely overlap. Additionally, because class actions are litigated predominantly in federal courts, many of the decisions on this subject are district court decisions, which are not controlling authority in any other court. In sum, lawyers' need for guidance in this area is significant.

A. Class Communications by Plaintiffs' Counsel

A trial court must determine "at an early practicable time" whether a lawsuit can be maintained as a class action.²⁰¹ A court's decision to allow a case to be maintained as a class action is referred to as "certifying" the class. It is certification that creates the class as a jurisprudential entity and transforms a case from an individual suit with class allegations into a true class action.²⁰²

Although class certification is important for a number of reasons, it has special meaning in the professional responsibility context. This is because courts generally take the position that before certification there is no attorney-client relationship between an attorney and any putative class members other than the plaintiffs who are seeking to be named class representatives.²⁰³ Indeed, before certification there is no reason to believe that unnamed members of a putative class have an attorney-client relationship with would-be class counsel. The unnamed putative class members surely have not sought legal advice from the lawyer; they almost certainly do not know the lawyer's identity; and it is equally likely that they do not know of the action to which they may someday become parties. The court's certification of a class is deemed to create an attorney-client relationship between class counsel and all class members.²⁰⁴ Importantly, that attorney-client relationship is confined to the class action; a lawyer who represents a class is not automatically imbued with authority to represent class members on matters separate from the class action, such as members' individual claims.²⁰⁵

Even if there is no formal attorney-client relationship between putative class counsel and putative class members prior to certification, however, they at least share an incipient fiduciary relationship.²⁰⁶ The existence of this incipient fiduciary relationship gives the plaintiffs' counsel some communication rights with respect to potential class members. For example, they may provide information to putative class members beyond that in notices supervised by the court, respond to inquiries, and seek information necessary to their representation of the class.

Putative class counsel do not have unlimited communication rights regardless of whether their relationship with putative class members is characterized as an attorney-client relationship or something else. If there is no attorney-client relationship, for example, any communication between counsel and putative class members is governed by Model Rule 4.3, which regulates lawyers' communications with unrepresented persons.²⁰⁷ The important need to protect absent class members' interests subjects class counsel to substantial judicial scrutiny and regulation. Under Federal Rule of Civil Procedure 23(d), a court has inherent jurisdiction to supervise any person or entity seeking to act on behalf of prospective class members. Courts considering whether to regulate communications between class counsel and putative class members should act principally because inaccuracies or other problems with the challenged communications may impair the fairness or adequacy of the putative class's representation under Rule 23(a)(4).

It is sometimes necessary for a court to reconsider its decision certifying a class. The discovery of new facts, changes in the parties, or substantive legal developments may compel a court to decertify a class. Decertification terminates the attorney-client relationship between class counsel and unnamed class members, who revert to being non-party witnesses.²⁰⁸ Counsel for any party who wish to communicate with them may then do so, subject to ethics rules governing communications with unrepresented persons and mandating honesty.

B. Restrictions on Plaintiffs' Counsel and the Issue of Prior Restraint

Courts clearly have the authority under Rule 23(d) to enjoin communications between counsel and putative class members, although that authority has limits.²⁰⁹Gulf Oil Co. v. Bernard²¹⁰ is the leading case on class communications. In Gulf, the Equal Employment Opportunity Commission and Gulf Oil Company entered into a conciliation agreement involving Gulf's alleged discrimination against African-American and female employees at one of its Texas refineries. Approximately one month later, several plaintiffs sued Gulf and another defendant on behalf of all present and former African-American employees and applicants who were rejected for employment at the refinery. In suing under several civil rights statutes, the plaintiffs sought to enforce the alleged rights of many employees and applicants who were receiving settlement offers from Gulf under its conciliation agreement with the EEOC.

Gulf filed a motion in the district court seeking to limit communications by the parties and plaintiffs' counsel with putative class members.²¹¹ Many of the employees who were entitled to back pay under the conciliation agreement had been paid and had signed releases by the time the class action was filed. After being served with the class action, Gulf stopped sending back pay offers and releases to putative class members. Gulf then alleged that one of the plaintiffs' lawyers had attended a meeting of putative class members at which he discussed the case and recommended that the employees return any back pay checks they had received and not sign releases sent under the conciliation agreement because they would "receive at least double the amounts involved through the class action."²¹² The district court entered a temporary order prohibiting all counsel for all parties from having any communications concerning the case with actual or potential class members. The court did not, however, make related findings of fact. Gulf later moved to modify the order to allow it to continue sending mailings to putative class members soliciting releases in exchange for back pay awards fixed under the conciliation agreement. The plaintiffs resisted, arguing that the court's ban on their communications with putative class members violated the First Amendment.²¹³ The district court heard argument on the motion but took no evidence. Additional briefing, including the submission of affidavits by plaintiffs' counsel, followed.²¹⁴

The district court ultimately issued an order along the lines requested by Gulf with some modifications. More particularly:

This order imposed a complete ban on all communications concerning the class action between parties or their counsel and any actual or potential class member who was not a formal party, without the prior approval of the court. It gave examples of forbidden communications, including any solicitation of legal representation of potential or actual class members, and any statements "which may tend to misrepresent the status, purposes and effects of the class action" or "create impressions tending without cause, to reflect adversely on any party, any counsel, this Court, or the administration of justice." The order exempted attorney-client communications initiated by the client, and communications in the regular course of business. It further stated that if any party or counsel "assert[ed] a constitutional right to communicate . . . without prior restraint," and did so communicate, he should file with the court a copy or summary of the communication within five days. The order, finally, exempted communications from Gulf involving the conciliation agreement and its settlement process.²¹⁵

In issuing this order the district court made no findings of fact, nor did it explain its decision.²¹⁶

Plaintiffs' counsel prepared a leaflet to send to putative class members subject to court approval. The leaflet urged them to consult with a lawyer before signing the releases offered by Gulf. The leaflet referred to the class action and identified plaintiffs' counsel.²¹⁷ The plaintiffs argued that the notice provided in the leaflet enjoyed constitutional protection and was necessary for the continued prosecution of the class action. Gulf opposed the motion. The district court did not rule on the motion until after a court-imposed deadline for acceptance of Gulf's offer expired. The court denied the motion in a one-sentence order that did not explain the reason for the denial. As a result, the named plaintiffs and their counsel were prevented from communicating with the putative class before the deadline expired.²¹⁸

Following summary judgment, the plaintiffs appealed to the Fifth Circuit, arguing that the limitations on their communications imposed by the district court exceeded the authority granted to it by Federal Rule of Civil Procedure 23(d) and violated the First Amendment. A divided Fifth Circuit panel affirmed the district court.²¹⁹ The...