NACA adopts Third Edition of its Standards and Guidelines for Litigating and Settling Class Actions

by Stephen Gardner

The Board of Directors of the National Association of Consumer Advocates adopted the Third Edition of its Standards and Guidelines for Litigating and Settling Class Actions on May 13 (Download here), continuing a tradition of setting high standards for the ways consumer class actions are handled that began with the first Guidelines adopted in 1997 and published at 176 F.R.D. 370. (NACA issued the Second Edition of the Guidelines in 2006, published at 255 F.R.D. 215)

A number of courts have referred to the Guidelines, including Boyle v, Giral, 820 A.2d 561, 569 fn. 8 (D.C.C.A. 2003); Braud v. Transport Service Co. of Illinois, 2010 WL 3283398 (2010 E.D. La.); Figueroa v. Sharper Image Corp., 517 F. Supp. 2d 1292, 1308 (S.D. Fla. 2007); Henderson v. Eaton, 2002 WL 31415728, *6 (E.D.La. 2002); In re Compact Disc Minimum Advertised Price Antitrust Litigation, 216 F.R.D. 197, 204 (D.Me. 2003); In re Educational Testing Service Praxis Principles of Learning and Teaching, Grades 7-12 Litigation, 447 F.Supp.2d 612, (E.D.La. 2006); In re Mexico Money Transfer Litigation (Western Union and Valuta), 164 F.Supp.2d 1002, 1028-1030 (N.D.Il. 2000); In re Prudential Ins. Co. America Sales Practice Litigation Agent Actions, 278 F.3d 175, 194 fn. 1 (3rd Cir. 2002); Milkman v. American Travellers Life Ins. Co., 2002 WL 778272, *7-9  (Pa.Com.Pl. 2002); Moody v. Sears, 2007 WL 2582193 (N.C. Super. 2007);State v. Homeside Lending, Inc.,  826 A.2d 997, 1009-1011 (Vt. 2003); Wilson v. DirectBuy, Inc., 2011 WL 2050537 (D. Conn. 2011).

Because things have changed in the class action world since 2006, NACA’s Executive Director Ira Rheingold appointed a committee consisting of some of the most principled and experienced class action lawyers in the country (Rob Bramson, Seth Lesser, Mike Quirk, Stuart Rossman, and Brian Wolfman) and asked me to chair the committee. I’d had the privilege of helping draft the prior two editions of the Guidelines (together with committee member Rob Bramson), and was happy to coordinate the efforts of this excellent set of drafters.

The Third Edition is thoroughly updated on the law, and continues the spirit of demanding high ethical standards of NACA members who bring class actions. It covers a wide range of issues that arise in consumer class actions (listed below).

One significant, though regrettable, change from the Second Edition is that the Third Edition no longer has a guideline on arbitration, metaphorically marking the regrettable fact that the Supreme Court has effectively aided the business community in forcing arbitration in almost every situation covered by consumer laws.

Each Guideline is organized into three sections: A. The Issue (containing an overview of the current state of the topic of the specific Guideline), B. Discussion (discussing and addressing differing viewpoints), and C. NACA Guideline (the Guideline itself, which the Board adopted as NACA policy).

Reading any or all of these Guidelines provides a good overview of the current status of these issues, both factual and legal, and gives high standards for any lawyer who brings consumer class actions.

  • Guideline 1 – The Propriety Of Class Actions When Individual Recoveries Are Small                  
  • Guideline 2 – Settlements When Other Class Actions Are On File
  • Guideline 3 – Class Actions Involving Homes
  • Guideline 4 – Certificate Settlements
  • Guideline 5 – Additional Compensation To Named Plaintiffs
  • Guideline 6 – Class Member Buyoffs/Rule 68
  • Guideline 7 – Cy Pres Awards
  • Guideline 8 – Attorney Fee Considerations
  • Guideline 9 – Class Member Releases
  • Guideline 10 – Confidentiality
  • Guideline 11 – Improved Notice Of Settlement
  • Guideline 12 – Claim Forms
  • Guideline 13 – Communications With Class Members
  • Guideline 14 – Role Of Objectors
  • Guideline 15 – Monitoring Settlement Compliance

 UPDATE: Brian Wolfman points out to me that it was NACA member Chandler Visher who first suggested that NACA consider revising these Guidelines, so good on ya, Chandler.

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