Conclusion

dispositions combined, which is 13 months. 74 Eight disposition types had a mean time to disposition after certification that was shorter than that for settlement, including two verdicts. Lastly, in 25% of cases settled after certification, almost two years elapsed between the granting of the motion for certification and the settlement disposition.75

To the extent that time to disposition provides a useful gauge of settlement pressure, it would be difficult to conclude from these analyses that the certification decision forced settlement. The contrary argument to this conclusion, however, would be that the defendants were in fact forced into settlement, but that the process of settlement negotiation simply was time consuming because of the higher stakes of the outcome, thus decoupling the settlement pressure examination from the time-to-disposition inquiry. However, this theory cannot be tested using the available data. Keeping this possibility in mind, nevertheless, given the time to settlement it is reasonable to conclude that defendants are not forced into instant settlement, and that whatever level of pressure they may be operating under is not enough to compel them to immediately surrender during the negotiation process.

In sum, California data show that very few cases could be included in a category in which the commonly discussed parameters that define settlement pressure from class certification may have been a factor in the decision to settle. Many cases circumvented the issue altogether by including class certification as an element of the settlement itself. In cases with a class certified through a court-granted motion for certification, neither the overall disposition composition nor the time-to-settlement analyses seem to suggest an automatic or immediate progression from certification through motion to settlement which would allow the determination that pressure results in inevitable settlement. The conclusion here is not that the idea of settlement pressure is fabricated, or even altogether negligible, but rather that the pervasive effect of settlement pressure in California does not appear to be supported by the data.

Conclusion

Prior to this study, empirical data relating to California class certification was almost nonexistent, despite the importance of the certification decision to the maintenance of a class action case and the debates that often swirl around its impact on litigation. This initial analysis of systematically collected California certification data has revealed several interesting findings on the subject.

First, the findings supply a new perspective on the considerable growth in the number of class action filings observed over the study period.76 Though the filings data point to a significant

74 Mean, 412 days; median, 387 days. 75 See appen. D, table D.3 for full data. 76 See First Interim Report, supra note 2, at pp. 3-4: ―Total unlimited civil filings decreased 17.8% between 2000 and 2005 in comparison to a 63.3% increase in class action filings.‖

expansion in the class action area, the focused certification analyses show that the perceived scale of the class action landscape may differ according to how one views the data—whether one examines the total number of cases filed as class actions or instead confines the analyses only to cases that actually achieve class certification. Though class certification is integral to continuation of litigation on a class basis, the study shows that certification rates are actually quite low and, despite the large number of cases that are filed as class actions, most proceed to disposition on a nonclass basis. This may lead to conclusions regarding the scope of the class action arena that vary considerably depending on when one applies the ―class action‖ label.

However, while this finding may change the scope of the class action subset of civil litigation in California depending how one defines it, the overall impact on the court exerted by the remaining nonclass cases in the study is likely substantial, as a large portion of these cases are consolidated or coordinated or otherwise qualify and are ultimately litigated as designated complex cases. Designated complex cases present comparable intricate issues that require rigorous oversight and organization similar to that required in the management of a class action case.

In addition, the study shows that use of the classwide settlement vehicle increased in California over the study years, and that frequency of certification as part of a classwide settlement resolution far outstripped those certified through a litigated motion certification. This indicates that, in a large percentage of these cases, parties did reach a point at which they agreed to a mutually negotiated settlement agreement that is acceptable to both sides without travelling the more adversarial path of certification through litigated motion. This is perhaps attributable to measures implemented in the California courts that are specifically aimed at improving case management and communication in the complex litigation area overall.

The study findings regarding classwide settlement frequency also indicate that the widely debated settlement pressure effect caused by class certification may not be as pervasive as is generally thought. The low percentage of cases with a certified class reached through a litigated motion for certification indicates that the universe of cases in which settlement pressure may occur is rather small. In addition, the data show that, even within the small subset of cases in which class certification motions are granted, cases do not unavoidably settle after certification. However, a more detailed study of the actual settlement negotiations would be required to make a definitive statement about the role that settlement pressure plays in the ultimate outcome of the those cases.

Lastly, on the subject of settlement pressure, it is important to note that while the debate predominately centers on the deleterious effects of class certification on a defendant‘s litigation options, other views assert that there are situations in which certification can be beneficial to the defendant because of the binding effects of judgment or settlement. Certification can present

some advantage to the defendant who, after evaluating the plaintiffs‘ case, decides they have a greater likelihood of prevailing. Class certification in this instance may offer the defendants the opportunity to dispense with multiple plaintiffs in one efficient case action or to negotiate a reasonable settlement that includes the largest pool of eligible class members, thereby precluding the action from arising again in the future.

The findings and analyses in this first study of California class certification will certainly not put to rest to the various, often divergent opinions regarding settlement pressure, but it is hoped that they provide empirical data that can better inform ongoing discussions surrounding not only that issue, but also class action certification as a whole.

Appendix A: Certification Rates

Table A.1. Certified cases as percentage of disposed cases originally filed as class actions

Cases with a certified class (%) Disposed with a certified class Total disposed cases

2000 33% 2001 26% 2002 22% 2003 19% 2004 21% 2005 15% Total 22.3% 57 53 65 171 208 294

47 37 30 289

251 173 197 1,294

Table A.2. Disposed cases with no certification activity, by year, separated by final and interim disposition

Table A.3. Cases with motions for certification as a percent of total disposed cases, by year

Filed Year

Total disposed cases

No activity

No activity (%) No activity before final disposition No activity before final disposition (%) No activity before interim disposition

No activity before interim disposition (%)

2000 171 96 56% 60 35% 36 21% 2001 208 140 67% 91 44% 49 24% 2002 294 215 73% 146 50% 69 24% 2003 251 198 79% 108 43% 90 36% 2004 173 134 78% 74 43% 60 35% 2005 197 159 81% 80 41% 79 40% Total 1,294 942 73% 559 43% 383 30%

Filed Year Cases with motion for certification Total cases %

2000 46 171 27% 2001 44 208 21%

2002 34 2003 20 2004 10 294 251 173 12% 8% 6%

2005 12 Total 166

197 1,294 6% 13%

Table A.4. Outcomes of first motions for certification as a percentage of cases with motion for certification

Motion for certification granted No ruling on motion for certification Motion for certification denied

Certified as part of settlement after motion for certification

Total n % n % n % n % 2000 45 21 47% 4 9% 13 29% 7 16% 2001 44 25 57% 9 21% 5 11% 5 11% 2002 34 16 47% 9 27% 4 12% 5 15% 2003 20 6 30% 4 20% 5 25% 5 25% 2004 11 6 55% 3 27% 0 0% 2 18% 2005 12 3 25% 2 17% 5 42% 2 17% Total 166 77 44% 31 20% 32 20% 26 17%

Table A.5. Means of certification in program courts versus non-program courts

Nonprogram courts Program courts

n % n % Total Certified as part of settlement 35 54% 177 79% 212 Certified by motion 26 40% 39 17% 65 Certified by both means 4 6% 8 4% 12 Total certified 65 100% 224 100% 289

Table A.6. Outcome of motions for certification, if objection to motion was filed

No objection to motion for certification filed

Objection to motion for certification filed

n % n % Total No ruling on motion 34 71% 23 20% 57 Motion for certification denied 4 8% 32 27% 36 Motion for certification granted 10 21% 63 53% 73 Total 48 100% 118 100% 166

Appendix B: Certification by Case Type

Table B.1. Certification activity by case type

Case Type

Certified by motion

Certified as part of settlement

Certified by both means

Not certified after motion

No certification activity

Total disposed

Employment 22 108 5 15 222 372 Business tort 23 53 2 16 264 358 Other 8 15 0 10 108 141 Breach of contract 2 18 2 6 91 119 Antitrust 3 2 1 3 66 75 Construction defect 1 1 0 4 49 55 Product liability 0 1 1 2 42 46 Unknown 1 2 1 2 38 44 Fraud 1 7 0 5 30 43 Securities litigation 3 5 0 0 13 21 Civil rights 1 0 0 0 19 20 Total 65 212 12 63 942 1,294

Table B.2. Specificity of class definitions in certified versus uncertified classes

Specific class size given Class size defined as "more than" a specific number Class with undefined scope "Unknown" class size Total

n Certified n Uncertified

144 50% 139 14%

29 10% 156 16% 80 28% 431 43% 36 12% 279 28% 289 100% 1,005 100%

Table B.3. Specificity of class definitions in employment cases versus all other case types

Specific class size Class size "more than" a specific number Class with undefined scope "Unknown" class size Total n

Employment All other case types

%

n % 135 36% 140 15% 100 27% 86 9% 72 19% 450 49% 65 17% 246 27% 372 100% 922 100%

Appendix C: Certification Time Analysis

Figure C.1. Days between filing of the class action cases and the filing of the first motion for certification

Figure C.2. Days between filing of first motion for certification and objection to that same motion

10

Median time to first motion

Mean time to first motion

8

6

4

2

0

0 500

1000 Days from Filing to First Motion for Certification 1500

25

20

Median time between first motion and first objection

Mean time between first motion and first objection

15

10

5

0

0 100 200 300 400 Days between filing of first motion for certification and objection

Figure C.3. Days between filing of first motion for certification and court ruling on the motion

25

20

Median time from first motion to first ruling

Mean time from fist motion to first ruling

15

10

5

0

0 200 400 600 800

Days from filing of first motion to certify to court ruling on the motion

Appendix D: Disposition Analysis

Table D.1. Disposition breakdown, certified versus uncertified

Cases with a certified class

Cases without a certified class

n % n %

Settlement

256 88.6% 154 15.3% Dismissed with prejudice 6 2.1% 209 20.8% Dismissed without prejudice 5 1.7% 157 15.6% Summary judgment for defendant 5 1.7% 44 4.4% Coordinated 4 1.4% 135 13.4% Stayed 3 1.0% 19 1.9% Certification status appeal 2 0.7% 0 0.0% Removed to federal court 2 0.7% 105 10.4% Coordinated for settlement 1 0.3% 0 0.0% Federal settlement 1 0.3% 0 0.0% Other 1 0.3% 11 1.1% Transferred 1 0.3% 37 3.7% Verdict for defendant 1 0.3% 5 0.5% Verdict for plaintiff 1 0.3% 2 0.2% Consolidated with another case 0 0.0% 117 11.6% Blank 0 0.0% 3 0.3% Interlocutory appeal 0 0.0% 2 0.2% Unknown 0 0.0% 5 0.5% Total 289 100.0% 1,005 100.0%

Table D.2. Disposition composition comparison: class certified as part of settlement, class certified by motion, class not certified after a motion and cases with no certification activity

Class certified as part of settlement

Class certified by motion

Class not certified after motion

No class certification activity

Disposition n Certified as part of a settlement (%) n

Certified by motion (%) n

Not certified after motion (%) n

Cases with no activity (%) Settlement 208 99.0% 36 69.2% 17 36.1% 137 26.1% Dismissed with prejudice 1 0.5% 5 9.6% 14 29.8% 195 37.2% Summary judgment for defendant - - 5 9.6% 11 23.4% 33 6.3% Dismissed without prejudice 1 0.5% 4 7.7% 4 5.8% 153 29.2% Verdict for defendant - - 1 1.9% - - 5 1.0% Verdict for plaintiff - - 1 1.9% 1 2.1% 1 0.2% Total 210 100.0% 52 100.0% 47 100.0% 524 100.0%

Table D.3. Days between granting of motion for certification and settlement, by percentile

Percentile Largest Smallest

1% disposed 38 days 38 days 5% 132 90 10% 170 132 25% 286 133

50% 479 479

75% 732 1,211

90% 1,008

1,214 95% 1,214 1,343 99% disposed 1,464 days 1,464 days