Lastly, requiring objectors to satisfy specific requirements before appealing a class action settlement can deter those who are not willing to invest time or money to pursue an appeal that may be unsuccessful. For instance, the parties can require non-named class members to intervene in the district court to have the right to appeal. The parties can also request the court require objectors to post a bond for appeal. Circuits are split as to what amount of bond is appropriate, with some jurisdictions imposing only court-specific costs while others include the parties' attorney fees to defend the appeal.18 But any amount of bond might serve to discourage a meritless appeal. In addition, the parties can invoke Federal Appellate Rule 38, which permits an appellate court to "award just damages and single or double costs to the appellee," as a sanction for frivolous appeals and a way to discourage professional objectors from challenging settlements in the future.19
In summary, when actively litigating a class action, there are a number of tactical maneuvers a company can make to defend itself. But the importance of steps taken before a class action is filed, as well as the steps taken to see a class action settlement through to the end, should not be overlooked. Often, a proactive approach at these crucial junctures will ultimately better serve the company's interests.
Christina Guerola Sarchio, a partner in Orrick, Herrington & Sutcliffe's commercial litigation group in New York, focuses on commercial litigation, antitrust and white-collar criminal defense matters.
1. In re Toyota Motor Hybrid Brake Mktg., Sales Practices & Prods. Liab. Litig., No. SAML 10-2172-CJC, 2013 WL 150205 (C.D. Cal. Jan. 9, 2013) (denying class certification).
2. Winzler v. Toyota Motor Sales USA, 681 F.3d 1208 (10th Cir. 2012) (dismissing action for mootness after Toyota voluntarily recalled the vehicles that were the subject of the pending litigation).
3. In re ConAgra Peanut Butter Prods. Liab. Litig., 251 F.R.D. 689 (N.D. Ga. 2008); see also Webb v. Carter's, 272 F.R.D. 489 (C.D. Cal. 2011) (rejecting a class action against the manufacturer of children's tagless clothes that was already offering the relief sought by the putative class members).
4. In re Phenylpropanolamine (PPA) Prods. Liab. Litig., 214 F.R.D. 614 (W.D. Wash. 2003) (finding class certification not superior to defendants' already-existing refund and product replacement program, notwithstanding the proof of purchase limitation).
5. In re Aqua Dots Prods. Liab. Litig., 654 F.3d 748 (7th Cir. 2011) (affirming on different grounds the district court's denial of class certification against a manufacturer that implemented procedures to reimburse purchasers of a defective toy).
6. AT&T Mobility v. Concepcion, 131 S. Ct. 1740 (2011).
7. Marmet Health Care Ctr. v. Brown, 132 S. Ct. 1201 (2012) (invalidating public policy prohibition against arbitration agreements as to personal injury and wrongful death claims against nursing homes).
8. Flores v. West Covina Auto Grp., B238265, 2013 WL 139200 (Cal. Ct. App. Jan. 11, 2013) (granting auto dealer's motion to compel arbitration pursuant to class action waiver contained in a form contract widely used by dealerships throughout the state, finding preempted California's Consumers Legal Remedies Act, which contained an anti-waiver provision); Ayzenberg v. Bronx House Emanuel Campus, 93 A.D.3d 607, 941 N.Y.S.2d 106 (N.Y. App. Div. 2012) (in action for personal injuries, state statute against arbitration clauses in contracts for the sale of services preempted).
9. Only one circuit had initially deviated from the holdings of other circuits post-Concepcion that the federal Magnuson-Moss Warranty Act does not preclude mandatory arbitration provisions in consumer warranty contracts, but subsequently withdrew its opinion without explanation. See Kolev v. Euromotors West/The Auto Gallery, 676 F. 3d 867 (9th Cir. 2012), withdrawing 658 F.3d 1024 (9th Cir. 2011).
10. See Dennis v. Kellogg, 697 F. 3d 858 (9th Cir. 2012) (rejecting settlement where, inter alia, the proposed cy pres distribution of funds and food items to charities that feed the indigent had "little or nothing to do" with combating allegedly false advertising).