The Class Action Playbook: Immediate First Steps for Companies Defending Against Consumer Class Actions


Class action litigation is a significant risk for consumer-facing companies.  An adverse outcome in a class action case can result in astronomical liability.  Moreover, defending a class action may consume company resources and divert attention from core business objectives.  To mitigate these risks, executives and in-house lawyers must take deliberate and decisive action when presented with a newly filed class action case, a litigation threat letter or mounting consumer complaints that appear to be headed toward litigation.

The list below outlines the first steps a company should take to gather and preserve the information that may be necessary to defend against consumer class action claims.  For each of these steps, it is imperative that in-house attorneys or outside counsel take the lead to ensure preservation of the attorney-client privilege and attorney work product protections.

  1. Call the In-House Lawyers and/or Engage Outside Counsel:  Executives should contact the company’s in-house lawyers or outside counsel as soon as possible after receiving notice of a class action complaint against the company, a credible litigation threat or mounting consumer complaints.  As noted, it is imperative that attorneys lead all of the efforts discussed below in a manner that preserves attorney-client privilege and attorney work product protections.
  2. Assess the Nature and Merits of the Allegations:  Identify the policies, procedures, products or practices that are being challenged and consider the following issues:
    1. What are the legal claims alleged?  Has the company faced similar allegations in the past?  What was the outcome?
    2. Identify factual and legal defenses to the claims.
    3. How many putative class members exist?
    4. What is the relevant time period/class period?
    5. What is the potential financial exposure?
  3. Identify Key Individuals:  Identify the key individuals within the company who may have first-hand knowledge regarding these issues.  Depending on the circumstances, it may make sense for the company’s in-house lawyers or outside counsel to conduct initial interviews with these individuals to evaluate the merits of the claims alleged.  All such interviews must be conducted in a manner that preserves attorney-client privilege and the work product doctrine.
  4. Locate Documents, Evidence and Custodians:  Assess where potentially relevant documents (including electronically stored information (“ESI”)), communications and any other evidence may be located within the company.  Identify all potentially relevant custodians of this information.
  5. Preserve Documents and Evidence:  Issue a litigation hold for documents (including ESI), communications and any other evidence to all conceivably relevant custodians.  The duty to preserve evidence, including but not limited to documents, ESI or other tangible materials, may arise when a party is aware of pending litigation, litigation is threatened, or when litigation is reasonably foreseeable under the facts and circumstances in question.
  6. Contracts, Agreements and Arbitration Provisions:  Identify any potentially applicable contracts or agreements.  In particular, be on the lookout for contracts or agreements that contain arbitration provisions that may apply.
  7. Marshal Evidence Related to the Named Plaintiff(s):  Locate and review all company records pertaining to the named plaintiff(s).  This information may be critical to knocking out the individual claims, terminating the case entirely, negotiating an individual settlement and/or defeating class certification.
  8. Assess Key Deadlines:
    1. Active Litigation:  For active litigation, review the case docket to identify all pertinent deadlines.
      1. Removal: If the case is pending in state court, the clock for removal may already be ticking.  See 28 U.S.C. § 1446 (b)(1).
      2. Responsive Pleading Deadline: What is the deadline for a responsive pleading in the relevant jurisdiction?
    2. Litigation Threats:  For litigation threats, review whether the opposing party included a deadline to respond and strategize regarding next steps.
  9. Understand the Forum and the Judge:  Obtain an understanding of the forum where the lawsuit has been filed.
    1. What contacts does the company have in the jurisdiction where the plaintiff filed the complaint?
    2. Has the company faced similar claims in this jurisdiction?
    3. Has the company ever appeared before the judge assigned to the case?
    4. Has the judge ever ruled on claims or issues similar to the ones presented in the new case?
  10. Individualized Questions of Law or Fact:  Assess whether any individualized legal or factual questions must be answered to assess the merits of the named plaintiffs’ claims or the claims of potential class members for the purposes of developing arguments to defeat class certification.

Companies should address the issues highlighted above as soon as they become aware of a pending class action complaint or a credible litigation threat.  The information obtained as a result of this process will provide a solid foundation for the company’s substantive defense strategy.

The material contained in this communication is informational, general in nature and does not constitute legal advice. The material contained in this communication should not be relied upon or used without consulting a lawyer to consider your specific circumstances. This communication was published on the date specified and may not include any changes in the topics, laws, rules or regulations covered. Receipt of this communication does not establish an attorney-client relationship. In some jurisdictions, this communication may be considered attorney advertising.


About the Author: Matthew M. Morrissey

Matthew Morrissey focuses his practice on high-stakes litigation. He frequently defends clients facing class actions arising under federal and state consumer protection and privacy laws. Matt also represents clients in complex commercial disputes, securities litigation and other financial services matters pending in courts across the country.

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