Class Action Abuse: Precertification Discovery As A Fishing Expedition

June 17, 2020

Lauren De Lilly and Alexandria Ruiz, Sidley Austin LLP

California State Courts More Permissive Than Federal Courts

In purported class actions, precertification discovery requests to obtain information about similarly situated individuals are often nothing more than burdensome fishing expeditions designed to identify additional clients for plaintiffs’ counsel. The potential for abuse is especially high when a case has devolved into a “headless” class action, i.e., when a court has determined that the named plaintiff is ineligible to represent the purported class. 

Federal courts understand and have generally barred discovery that seeks only to identify a replacement class representative.  But California state courts—a hot bed of class action litigation—have been more permissive, making it all the more important to remove purported class actions from state to federal courts in California.

The Issue:  Precertification Discovery Requests for Putative Class-Member Information

As a defendant in a purported class action in California state court, you will likely receive discovery requests seeking the identities and contact information of putative class members.

In the base case, where the court has not yet decided whether the plaintiff may represent the purported class, California courts may permit this discovery.[1]

If you are sued in federal court, however, a plaintiff’s attempt to obtain similar information is less likely to succeed.  A plaintiff requesting any type of class-wide information must show that the discovery “is likely to produce substantiation of the class allegations.”[2] A plaintiff’s assertion that the entire putative class has suffered the same injury simply does not suffice.

Importance

This is important because responding to discovery requests concerning similarly situated individuals can be expensive and time-consuming. And especially before a class is certified, such requests may simply be fishing expeditions designed to identify additional clients for plaintiffs’ counsel and to put more pressure on the defendants to settle.

Headless Class Actions

The potential for discovery abuse is especially high in “headless” class actions, where the named plaintiff has been determined to lack standing or otherwise to be ineligible to represent the putative class.

Federal courts generally deny discovery specifically to identify a new class representative, recognizing it is a “fishing expedition.”[3]  Under Federal Rule of Civil Procedure 26(b)(1), discovery sought must be “relevant to any party’s claim or defense.” If the named plaintiffs are not entitled to pursue class relief, they have no legitimate interest in class discovery. Thus, courts considering whether discovery sought solely for the purpose of identifying a new plaintiff have concluded that such discovery fails to satisfy the requisite relevancy standard.

In California courts, however, the defunct named plaintiff may move for precertification discovery of putative class member information for the express purpose of identifying a new representative.[4] A defendant can avoid such discovery if the actual or potential abuse of the class action procedure created by permitting the discovery outweighs the rights of the parties under the circumstances.[5]

Courts weigh factors like the named plaintiff’s interest in the litigation, the validity of her claims, the putative class’s interests, and whether other means could provide the class with relief. Under that balancing test, California courts sometimes grant discovery to identify class representatives[6] and sometimes deny it.[7]

The Bottom Line

Among the strategic reasons to remove class actions to federal court, avoiding precertification discovery is definitely one.  If removal is not possible, it is important to start your investigation into the named plaintiff and her allegations early, develop a discovery strategy to protect yourself through the critical precertification phase, and be prepared if you end up confronting the headless class action.

Lauren De Lilly and Alexandria Ruiz are associates at Sidley Austin LLP.

 


[1] Pioneer Electronics (USA), Inc. v. Super. Ct. (Olmstead), 40 Cal. 4th 360, 373 (2007); see also Puerto v. Super. Ct., 158 Cal. App. 4th 1242, 1250 (2008)

[2] Perez v. Safelite Grp., Inc., 55 Fed. App’x 667, 668-69 (9th Cir. 2014), as amended on denial of reh’g and reh’g en banc (Mar. 7, 2014).

[3] See, e.g., Falcon v. Phillips Elec. N. Am. Corp., 304 Fed. App’x 896, 898 (2d Cir. 2008); Reed v. Bowen, 849 F.2d 1307, 1313-14 (10th Cir. 1988); Douglas v. Talk Am., Inc., 266 F.R.D. 464, 467-68 (C.D. Cal. 2010).

[4] Safeco Ins. Co. of Amer. v. Super. Ct., 173 Cal. App. 4th 285, 298, 300 (2003).

[5] See Parris v. Super. Ct., 109 Cal. App. 4th 285 (2003).

[6] See Safeco Ins. Co. of Am. v. Super. Ct., 173 Cal. App. 4th 814, 834 (2009), CashCall, Inc. v. Super. Ct., 159 Cal. App. 4th 273 (2008); First Am. Title Ins. v. Super. Ct., 146 Cal. App. 4th 1564, 1566-67 (2007); Best Buy Stores, L.P. v. Super. Ct., 137 Cal. App. 4th 772 (2006).

[7] See CVS Pharmacy, Inc. v. Super. Ct., 241 Cal. App. 4th 300 (2015); Starbucks Corp. v. Super. Ct., 194 Cal. App. 4th 820 (2011); Cryoport Sys. v. CNA Ins. Cos., 149 Cal. App. 4th 627 (2007).