Seven Do’s and One Don't for Class Action Mediations
Having experienced class action mediations both as advocate and as mediator, I have witnessed a variety of approaches to the mediation process, some helpful and some unhelpful. Here is a partial list of do’s and don’ts when representing parties to a class action mediation.
DO come to the mediation fully prepared, knowing the strengths and weaknesses of your case and understanding the litigation risks to both sides. The risk analysis will depend in part on the stage of litigation during which the mediation occurs. For example, has the court yet ruled on the motion for class certification? If so, what is the likelihood that the court’s decision will withstand an appeal (if it hasn’t already gone through a Rule 23(f) appeal)? If not, how do you handicap the likelihood of class certification? Has summary judgment been briefed, argued, or decided? If not decided yet, what are the probabilities of success for each side? If plaintiffs prevail, what models are available for measuring damages, and which of those models have the greatest chance of being chosen? Are there any significant cases pending on appeal in a relevant jurisdiction that could change your assessment of the case? These and other questions should be fully evaluated and discussed with your clients before you set foot in the mediator’s office.
DO understand and clearly communicate the scope of the class that would be covered by a settlement. As I have mentioned in previous posts, the class definition is central to any settlement, as it determines who is eligible for class relief and who will be releasing claims. Class definitions have a few key components, including their geographical scope, their temporal scope, and the event, transaction, or relationship that entitles the class members to participate in the case. Clarity early in the process around how the settlement class will be defined can help prevent post-mediation disputes about the scope of the settlement.
If you are part of a group of lawyers, DO identify your roles and work out any differences among you in advance of the mediation. Class action lawyers often travel in packs, especially on the plaintiffs’ side. By the time you get to mediation, your respective roles may or may not be clear, depending in part on whether the court has appointed lead counsel or liaison counsel. Decide in advance who will speak for the group and lead the negotiation process. Have discussions among the group in advance about the range of settlement options that would or would not be acceptable. If the case will require an allocation among a group of attorneys or the subclasses they represent, try at least to arrive at a tentative allocation before the mediation. Do your best to leave any differences behind before the mediation session begins in order to avoid an avoidable blow up during the precious time in the mediator’s office.
DO be as candid as you can be with the mediator. Help the mediator understand the drivers behind your decision making. Is the case only about money, or are there other interests at stake, such as concern that the litigation could set a precedent that will adversely affect either side going forward, or about the publicity that further litigation might generate. You don’t have to authorize the mediator to disclose your interests to the other side, but helping the mediator understand them privately will help them facilitate the settlement that you and your counterparts across the table are there to achieve.
DO play nice. Each side is at the mediation with the same goal: to reach an agreement that will benefit their clients and avoid the ongoing risks and costs of litigation. If you are successful, you will work together to seek the court’s approval of the settlement you have hammered out. Avoiding acrimony during the course of the mediation will help set the stage for a cooperative relationship that will optimize the likelihood that you will succeed. If the relationship has been strained before, the mediation is the time to begin to repair the damage by treating each other with the respect and dignity that you all deserve.
DON’T get discouraged or close doors. I don’t know what the statistics would show, but in my experience a large percentage of class actions do not settle after the first mediation session. Although the parties may walk away from the first session still miles apart in their settlement positions, they often will return after a few days, weeks, or months to pick up where they left off, and may well reach an agreement after two, three, or even more sessions. The key to ultimate success in those situations is not to get overly discouraged and not to form grudges or part ways in an uncivil or unprofessional manner. If the case doesn’t settle on day one, chances are it will settle sometime later, and to get to “yes” you still need to be able to communicate productively with the other side.
DO write it down. When, after a day or more of mediation, you finally reach agreement on the key terms of a settlement, a good mediator will work with you to reduce the agreement into a short term sheet or memorandum of understanding that both sides will sign before leaving the mediator’s office. The document should expressly contemplate the drafting and execution of a more complete and binding settlement agreement in the coming days or weeks, and should also describe clearly the parties’ preliminary agreement on key terms, including but not limited to the settlement amount, how the settlement amount will be distributed to the class, any incentive payments to named plaintiffs, the class definition, the general nature and scope of the release, and the parties’ understanding about the amount of and procedures around attorneys’ fees.
DO select a mediator with class action experience. Class actions and class action settlements are complicated. Settling a class action is not like settling an individual claim, and conducting a class action mediation is different as well. When you are selecting a class action mediator, make sure that they will bring to the table enough experience with class action settlements to recognize their unique nuances, challenges, and opportunities.