What Happens in a Class Action Mediation?

Answering your questions about the goings on behind closed doors

Dwight W. Stone and Brian L. Moffet are attorneys at Miles & Stockbridge in Baltimore. They primarily practice in the area of consumer class actions, on behalf of financial service providers, manufacturers, dealers and other businesses involving consumer goods and services. They’re also in a rare minority these days, because they have taken cases to trial.

“It’s not unusual to run into class action attorneys who have been practicing for 15 years or more and have never been in a significant trial, much less a class action trial,” says Stone.

“Very few get tried in court because of the potential liability associated with class action claims,” Moffet adds.

Instead, class actions are defeated by motion prior to trial or settled, often in mediation.

What is mediation?

Quite simply, it’s a negotiation facilitated by a neutral third party acting between opposing parties. What this means on a case-by-case basis is largely dependent on the circumstances, but a few things are fairly straightforward. Obviously your biggest asset in these kinds of cases is a reputable and experienced class action attorney.

“Because all class settlements have to be approved by the court, it’s often advisable to bring in a well-respected mediator,” says Stone. “If a court is going to approve a settlement, it needs to know it was negotiated zealously by each side, and judges can be more comfortable  approving a settlement  if a mediator was involved. There are also so many moving parts in the negotiation that it’s often difficult to do it without someone in the middle.”

It’s not unusual for this neutral to be a retired judge or a respected attorney specializing in alternative dispute resolution. As for who else is in the room: “You always have the defendant representatives with their lawyers, since they’re the ones writing the check, and sometimes their insurer,” Stone says. “On the plaintiff side, sometimes you have the named plaintiff but oftentimes you don’t; you only have plaintiff’s attorneys. It varies.”

Sometimes a mediation session takes place in one room, and parties have private sidebars when they need to consider something, but it’s more common  for each side to occupy separate rooms for most of the time with  the mediator shuttling between them.

When do you mediate?

A question Stone and Moffet often ask clients to consider: What type of claim is filed against you? Is it a new or novel kind of claim, or one with a track record with courts in your jurisdiction? The answer may dictate your willingness to fight or settle.

“There are cases where the client wants to resolve the case by settling early, and we might talk to plaintiff’s counsel and have the litigation stayed while we mediate to see if there’s a reasonable early resolution,” Stone says. “Even though all sorts of issues can come up in negotiation, sometimes the best resolution is to settle on reasonable terms early to save on defense costs and disruption for the business.”

That said, every case is different and an early settlement isn’t necessarily your best strategy. Sometimes it may be in your best interest to fight by preventing the case from becoming certified as a class action or attempting to defeat claims via dispositive motion. "Even if a client intends to vigorously defend, if the class then becomes certified, that’s often the point that they may at least consider settlement options more seriously if a reasonable resolution is possible,” Stone adds.

The definition of the class is often a point of contention, and is something that can be negotiated in the mediation itself.

Preparation and compensation

The length of time a mediation takes will vary, and it depends largely on the opposing counsel and plaintiffs, Stone says. He and Moffet had a case that required four mediation sessions over the course of several months, whereas others have been completed in one session. And after reaching a settlement in principle, “actually negotiating the lengthy written settlement agreement, and all of its provisions, can be tricky and the proverbial trap for the unwary,” Stone adds.

“The biggest thing is preparation,” Moffet continues. “Before a defendant goes into a mediation, they need to have a good grasp of how many people are potentially in the class and what is at stake for each of them. The success is often dictated by how much prep you’ve done on the underlying claims. Because a settlement of $100 per class member looks one way for 50 people and entirely different when for 10,000 people.”

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