U.S. Ninth Circuit Declines to Mechanically Apply Traditional Conflict Rules to Class Actions

In Legal Ethics & Professionalism, What's New in Class Action Law?, What's New in the Courts by gravierhouseLeave a Comment

The articulated bases for the State of California’s automatic disqualification rule for simultaneous conflicts “fits the circumstances of the lawyer who represents a class of plaintiffs whose interests may in some ways be adverse to each other, but all of whose interests are adverse to the defendant. In a class action, conflicts often arise not because an attorney simultaneously represents litigation adversaries but because they simultaneously represent different members of the same class who develop divergent interests regarding how to prevail on their shared claims. Thus, in Radcliffe I, we explained that the conditional incentive award was improper because it ‘undermined the named plaintiffs’ ability to ‘fairly and adequately protect the interests of the class.’ ‘This requirement is rooted in due-process concerns—absent class members must be afforded adequate representation before entry of a judgment which binds them.’ These concerns with adequate representation and due process for absent party members are simply not  present in individual plaintiff suits….”

“Finally, we note that numerous other circuit courts have declined to apply the same disqualification rules to class actions as to non-class actions specifically because of the different concerns at issue for attorney representation in class action lawsuits. In In re “Agent Orange” the Second Circuit held that ‘although automatic disqualification might promote the salutary ends of confidentiality and loyalty’ in traditional cases, ‘it would have a serious adverse effect on class actions.’ It noted that class actions are often ‘the only practical means’ for plaintiffs with small individual claims to protect their rights, and that ‘often only the attorneys who have represented the class, rather than any of the class members themselves, have substantial familiarity with the prior proceedings.’  In turn, ‘the prospect of having those most familiar [with the case] be automatically disqualified whenever class members have conflicting interests would substantially diminish the efficacy of class actions as a method of dispute resolution.’ The Second Circuit concluded that ‘the traditional rules that have been developed in the course of attorneys’ representation of the interests of clients outside of the class action context should not be mechanically applied to the problems that arise in the settlement of class action litigation.’

“In Lazy Oil v. Witco, the Third Circuit also rejected the notion that a conflict of interest should automatically disqualify class counsel even though such a result would be required in a non-class action. It noted that ‘in many class actions, one or more class representatives will object to a settlement and become adverse parties’ to the rest of the class. ‘If, by applying the usual rules on attorney-client relations, class counsel could easily be disqualified in these cases, not only would the objectors enjoy great ‘leverage,’ but many fair and reasonable settlements would be undermined by the need to find substitute counsel after months or even years of fruitful settlement negotiations.’”

 

Radcliffe v. Hernandez, No.14-56101, 2016 WL 1178732 (9th Cir. March 28, 2016).

 

 

 

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