A Notable Defense Success In The Class-Action Arena: A Practitioner's View

Friday, December 1, 2006 - 01:00

Editor: Mr. Wiegand, would you tell our readers something about your professional experience?

Wiegand: I am a litigation partner at Winston & Strawn, and have been with the firm for 16 years. I am involved in a wide variety of litigation matters from inception of the case through trial, including internal investigations that precede and anticipate litigation.

Editor: How did you come to Winston & Strawn? What were the things that attracted you to the firm?

Wiegand: I had been practicing for a short time at another firm and was not enjoying the practice. I knew of Winston through its reputation, and I was aware of its strong trial expertise. When I interviewed, I was impressed by the fact that the Winston lawyers spoke of litigation as a process, not as a substantive area of law. I think that is correct. As one gets into a litigation practice and begins to try cases, it becomes apparent that the law is the easier part and the pursuit of facts is the real challenge.

Editor: Please tell us about your practice. How has it evolved over the course of your career?

Wiegand: The evolution of my practice has been largely a process of learning how to put together all of the pieces of a puzzle. As a young associate, I did a great deal of factual and legal groundwork while observing seasoned lawyers combine it all. Then I began being responsible for developing larger pieces of a case. Eventually one needs to be able not merely to understand the big picture, but to see it in advance. At that point you are leading a trial team.

When I arrived at Winston, I was introduced to a somewhat different approach to litigation. Rather then simply deny every allegation and issue standard discovery requests, we think in terms of what the jury instructions will look like and the key facts relating to those instructions. We conduct discovery into those facts. It is a process that is completely trial-focused.

Editor: And your experience in defending putative class actions? Can you detect any particular trends in this arena?

Wiegand: I was fortunate in being involved, at a very early point in my career, in some cases that had importance in this area, including several Sears cases that resulted in denials of class certification. That was quite an education. There are trends. The plaintiffs' bar continues to be very creative. A class action can make sense in a securities context, where everyone involved is arguably similar under the "fraud on the market" theory. Then the theory evolves into systemic billing errors and the like.

Today this has evolved into consumer cases that involve complex interactions between customers and employees of the defendant company. The plaintiff strategy now is to convince the court that one or a few consumers were improperly treated, and that the court should assume that all customers of that company were treated the same. A more recent step is to rely much more heavily on the argument, whether implicit or explicit, that a class should be certified because the claims will not be pursued separately. This of course fails as a matter of due process, but that is where the plaintiffs' bar is attempting to push us.

Editor: You recently attained summary judgment in a class action suit brought in California state court - Adolphus Ray Morgan v. American International Group, Inc. - on behalf of a major financial services company, American General Financial Services. What is the factual background of the case?

Wiegand: The case began with three completely unrelated plaintiffs - the common denominator was their dismay over their personal financial situation - who decided to bring a case against American General. They each had loans from various lenders over the years, but I guess we drew the short stick. They used separate counsel, who then joined together in attempting to start a class action. From start to finish the plaintiffs' counsel were unable to identify any inappropriate activity with respect to any of the three named plaintiffs, much less the putative class. One unique twist to this case was that the plaintiffs attempted to claim that the loan documents were too difficult for the average person to understand. The theory is that the average adult cannot understand any loan documents. Certainly these documents were nothing out of the ordinary, and the court properly refused this theory. Aside from the basic tenets of contract law, the court recognized that if borrowers can escape their obligations merely by claiming they did not understand the written terms, we are looking at the collapse of the loan market.

Editor: What were the claims brought by the plaintiffs?

Wiegand: One plaintiff claimed that our client had caused her property taxes to increase because she had used her home as collateral in order to benefit from a lower interest rate. However, her house had not been correctly recorded with the county after she had inherited it some years earlier, and the county records had to be corrected. That led to a reassessment for which she blamed American General. Quite aside from the lack of any culpability on the part of American General, the allegation could not possibly support a class action.

The plaintiffs were not able to raise any fraud claims, and when their concealment claims failed, they attempted to rely on the unfair business practices prong of California's Unfair Competition Law - the celebrated UCL. The court agreed with us that a claim to the effect that the loan was inherently unfair - especially without reference to any specific term that was misrepresented or concealed - was simply too amorphous to bring under the UCL.

In a larger sense, this case is a realistic but unfortunate example of what occurs when a disparate group of customers files a class action complaint without any evidence of wrongdoing. The plaintiffs' claims were not only baseless, but wildly dissimilar. There was simply no evidence of wrongdoing. Nevertheless, these claims survived in court for over two years. That is not right.

Editor: Is this the end of the matter, or are these plaintiffs likely to return to the fray?

Wiegand: The individual plaintiffs are finished. The court, in a very strongly-worded decision, dismissed every claim of the named plaintiffs. It would be unwise to file a similar lawsuit, but I wish that meant more - the downside of losing is comparatively not much.

Editor: Do you detect a growing sense on the part of the bench that these types of claim need to be halted?

Wiegand: I think there is a growing recognition, on the part of most lawyers, many judges and the general public, that this kind of activity is a real burden on our justice system. It also is a tax on our economy. This recognition comes in part from media attention, but also from the fact that people find their employers being sued on claims that they find fictional. And judges are members of society, like the rest of us. In any event, today, more so than even five years ago, courts are willing to keep an open mind on whether allegations that might be worded strongly in an initial pleading have any real merit.

Editor: You have been in this particular arena for almost 20 years. Would you share with us your thoughts about what has been achieved in the debate over class action suits?

Wiegand: The Class Action Fairness Act is an important achievement. It curtails the availability of what plaintiffs' counsel have referred to as "magical jurisdictions." And when class actions are in federal court, it is possible to consolidate similar cases in a multidistrict proceeding, which can handle them more effectively.

In recent years the plaintiffs' bar has made a real effort to widen the ambit of class actions. This may be in the process of backfiring, however, because it is causing courts to reconnect with the origins of the class action format. Many of the classes being proposed would violate due process. Whether that becomes accepted judicial wisdom in years to come, however, remains to be seen.

Editor: Does a case like this one have an impact on jurisdictions that tend to be "plaintiff-friendly?"

Wiegand: Only in an indirect way, in that such cases contribute to an ongoing discussion. There is a certain fluidity with respect to "plaintiff-friendly" jurisdictions, and this is not a permanent designation. In Mississippi, for example, the voters elected a Supreme Court that put a stop to mass joinder cases. The citizens of that state realized that jackpot verdicts were driving away business and healthcare, and that, to inject some vitality in the state's economy, it was important to show that the state was possessed of a fair and impartial court system. Things can change.

Editor: What about the future?

Wiegand: I am certain that the plaintiffs' bar will continue to reinvent itself and develop new ways to bring class actions. Indeed, with the advent of CAFA, we are seeing plaintiffs' lawyers more carefully assess federal statutes, such as TILA, the FCRA and the FLSA [the Truth in Lending Act, the Fair Credit Reporting Act, and the Fair Labor Standards Act]. Plaintiffs were quick to avoid these in the past because they included an automatic trip to federal court. Now that they are no longer free to evade federal jurisdiction, they are beginning to see whether there are ways to mine the federal statutes for potential claims.

Where we go from there is anyone's guess.

Please email the interviewee at twiegand@winston.com with questions about this interview.