In Reliable Money Order, Inc. v. McKnight Sales Co., Inc., decided last week, the Seventh Circuit declined to overturn class certification of a Telephone Consumer Protection Act junk fax suit, despite class counsel obtaining discovery from a third party in one case and using it to spawn a series of other TCPA cases. The plaintiff lawyer had assured a third-party vendor that it would treat the information produced lists of businesses to whom the vendor had faxed ads for various clients – as confidential under a protective order and not to be used in any other matters. Plaintiff counsel then sent solicitation letters to many of the businesses identified, advising them that “you are likely to be a class member in one or more cases we are pursuing,” even though no such cases had yet been filed or certified. “Suffice it to say, while we neither approve of nor condone the actions of . . . attorneys when investigating the claims in this suit, we nevertheless do not conclude that counsels’ questionable performance in the investigative stage of this case prevents class certification,” the appeals court said. The court concluded that “when an ethical breach neither prejudices an attorney’s client nor undermines the integrity of the judicial proceedings, state bar authorities are generally better positioned to address the matter through disciplinary proceedings, rather than the courts through substantive sanction in the underlying lawsuit.” Applying this “serious doubt” standard, the Seventh Circuit concluded that denial of class certification is not appropriate unless attorney misconduct unfairly prejudices the class or other parties to the case (i.e., by self-dealing, fee arrangements creating conflict between attorney and class, inappropriately “selling out” class claims) or undermines the court’s ability to resolve the case (i.e., by improperly influencing witness testimony).
One question we often hear from clients is what can be done about class action lawyers who troll for plaintiffs, new cases and other “self-help” discovery by misusing business records produced in discovery, sending solicitation letters to client customers, or posting defamatory information on their own websites or Internet chat rooms. Misuse of discovery materials and processes can be a challenge to police because a plaintiff lawyer’s contact with prospective class members usually takes place outside of formal discovery and therefore outside the supervision of a judge. Adding to the frustration are cases holding that defense counsel may not communicate with, or pursue even formal discovery from, putative class members without prior permission from the court. For this reason, we take pains to scrutinize the plaintiff counsel’s interface with absent class members wherever possible, and the subject matter is fair game for discovery against the named plaintiffs. Even where what is found casts something less than “serious doubt” on opposing counsel’s conduct, it rarely fails to yield something useful and helps deter abuses.