The National Association of Consumer Advocates (NACA) recently released its Fourth Edition of Standards and Guidelines for Litigating and Settling Consumer Class Actions (August 2023) (“Guidelines”). The Guidelines were first developed over 25 years ago by some of the country’s most prominent consumer class action attorneys to help guide the consumer law community on the proper and ethical practice of class action law. They are regularly reviewed and updated to reflect new developments in class action practice and are a go-to source for answers to the unique issues that arise in consumer class actions.
The Guidelines aren’t just for consumer class action attorneys. They should be at the fingertips of solo practitioners, legal aid attorneys, and consumer lawyers whose practice may not typically involve class actions—a consumer client can become a class action named plaintiff through a co-counseling arrangement. Knowing and understanding the Guidelines will help practitioners achieve successful outcomes by avoiding some of the common pitfalls that arise in a class case. Whether you have read the Guidelines dozens of times or have never heard of them, now is the perfect time to pick them up, take a read, and save them as easily accessible copy for future reference.
This article examines four reasons why the new Guidelines are an essential resource, explains what they cover, and lists what is new in the Guidelines. The article also provides a list of other important class action resources available from NCLC.
Top Four Reasons Why the NACA Guidelines Are an Essential Resource
Over more than 25 years, the NACA Guidelines have become an important resource for the proper and ethical practice of consumer class action law—for courts, experts, class action attorneys, and co-counsel.
1. Courts and Federal Rules Rely on the Guidelines. Many of the Guidelines have been embraced and adopted by courts. Their principles were clearly reflected in both the 2004 and 2018 changes to Federal Rule of Civil Procedure 23. Over the years a significant number of judicial opinions have referred to the Guidelines. Even when not explicitly cited, the Guidelines provide a useful, citable reference that can be credibly relied upon in arguments raised in support of class action motions, petitions, and appellate briefs.
2. Expert Testimony in Class Actions Rely on the Guidelines. The Guidelines have formed the basis of expert testimony in support of class action certification and class action settlements as well as in support of objections to unacceptable settlement.
3. Class Action Attorneys Rely on the Guidelines. When opposing counsel push positions that are contrary to ethical class action practices or anathema to the best interests of class members, the Guidelines can be used to bolster arguments opposing those positions or in favor of positions that class counsel believe are appropriate and required under the circumstances.
4. Co-Counsel Rely on the Guidelines. Unfortunately, differences of opinion can arise between co-counsel regarding the pursuit of class claims. Conflicting strategic positions ordinarily must be resolved within the context and terms of the co-counseling agreement. When it comes to contested ethical issues, however, the Guidelines can provide critical added value to how those decisions are properly made. The value becomes even more effective when co-counsel are all members of NACA since membership in the organization is contingent, in part, on compliance with the principles of the Guidelines adopted by the organization. When co-counseling with NACA members, all plaintiff counsel are bound by the Guidelines which should definitively govern and determine how the ethical issues presented must be resolved.
Guidelines Comprehensively Address Knotty Class Action Issues
The Guidelines were first adopted in 1997 to respond to criticism of consumer class actions, seeking to provide a consensus framework of ethical and effective class action rules to guide the practice and hold it accountable. The Guidelines were subsequently updated in 2006 and in 2014, and the Fourth Edition was released in August 2023. The Fourth Edition comprehensively covers class action issues from the beginning of the litigation through issues arising even after the litigation is concluded.
Guideline 1: Communications with Class Members
Guideline 2: Confidentiality
Guideline 3: Named Plaintiff Buyoffs, Including Offers of Judgment under Rule 68
Guideline 4: Litigation When Similar Class Actions Are Pending
Guideline 5: Coupon Settlements.
Guideline 6: Cy Pres Awards
Guideline 7: Reversion
Guideline 8: Service Awards for Class Representatives
Guideline 9: Class Member Releases
Guideline 10 Notice of Settlement
Guideline 11: Claim Forms
Guideline 12: Objectors
Guideline 13: Attorney Fees
Guideline 14: Monitoring Settlement Compliance
Guideline 15: Class Actions Involving Homes
What Is New in the Guidelines’ Fourth Edition
The Fourth Edition reflects the most recent changes to the practice of class action law and contains these changes:
- Significant amendments to Rule 23 in 2018 have now been fully integrated into the Guidelines, specifically as they refer to the revised provisions regarding notice, objectors, and attorney fees.
For example, with respect to class notice, the 2018 amendments to Rule 23(c)(2)(B) addressed the need to modernize class notice in light of evolving communication technologies and by considering the particular needs of the case, rather than treating notice as a mere formality. See Rule 23’s advisory committee note to the 2018 amendments. The Advisory Committee made clear that the Rule is not intended to direct a specific means of notice, but to afford class counsel flexibility in determining the best method(s) for dissemination to ensure notice reaches class members. Id. Rule 23(c)(2)(B) “relies on courts and counsel to focus on the means or combination of means most likely to be effective in the case before the court.”
- The updated Guideline 10 on Class Notice mirrors the spirit of the Rule and the Advisory Committee’s comments. It encourages class counsel to use multiple forms of notice and to think outside the box to maximize claims rates. It provides various examples of notice forms that may be available to class counsel, such as internet banners, websites and press releases, in-store postings, and social media.
- Guideline 7, Reversion, was added as a new guideline. The issue of reversions, however, is closely related to the issue of cy pres distributions (since they often are portrayed as competing options for allocating residual class funds). The new Guideline establishes a strong, clear, and independent opposition to reversions in class action settlements.
- The Guidelines are reordered to make them more relevant and easier to use. They now follow a class action case chronology—beginning with the litigation, proceeding to the settlement, and ending with the post-action responsibilities of the parties.
- Old Guideline 1, The Propriety of Class Actions When Individual Recoveries are Small, was eliminated because it is not a guideline or ethical standard, but a policy argument justifying the use of the unique class procedure to aggregate claims.
- Unlike the past editions, the new Guidelines follow an organization like the Federal Rules of Evidence and Civil Procedure. Each guideline begins with a clear statement of the guideline’s standard, followed by an explanatory discussion.
- The guidelines are simplified and presented into clear definitive statements of the applicable ethical standards, and separately numbered for clarity, better accessibility, and easier use/reference. The format is consistently applied throughout the document.
NCLC Class Action Resources
NCLC’s Consumer Class Actions is a how-to manual for handling every aspect of a class action, geared both for class action specialists and general practitioners, written by experienced consumer class action litigators. It includes detailed analysis of class selection and definition, class discovery, defendant’s delaying tactics, certification, settlements, objections to settlements, attorney fees, and more. Also treated is the latest on both federal and state court standing law, Federal Rules of Civil Procedure discovery amendments, state-by-state analysis of state class action procedures, and sample pleadings.
NCLC’s Class Action Symposium is an annual event that takes place at its Consumer Rights Litigation Conference and convenes consumer class action attorneys from across the country. For nearly 25 years, the Symposium has been an essential educational and networking event for consumer class action practitioners. Panel sessions, “lightning rounds,” and roundtable discussions focus on cutting edge issues and developments in class action law and practice. This year’s Symposium is being held in Chicago on October 28–29 and there is still time to register even though formal registration is closed. Email [email protected].
NCLC’s Litigation Project. NCLC represents consumers in cutting-edge litigation that seeks to reform the rules of the marketplace. NCLC is interested in cases that will have a far-reaching impact and will advance economic, social, and racial justice. NCLC’s litigation activities are restricted to consumer law matters only, based on these guidelines and eligibility standards. A list of open cases is available here.
Reasons to Co-Counsel with NCLC. NCLC’s Litigation Project consists of two attorneys with a combined six decades of class action and complex litigation experience. NCLC’s unique position in the consumer law community provides it with a vast network of attorneys used to maximize resources and to bring together strong litigation teams made up of private lawyers, legal aid, and nonprofit groups. The project benefits from its access to NCLC’s in-house national experts on nearly every area of consumer law. Our experts are available to advise and strategize to help identify cases and develop legal theories that have the best chances of success. NCLC enjoys a longstanding reputation as a leader in the consumer law community. Click here for more reasons to co-counsel with NCLC.
Amicus Briefs. NCLC maintains an active amicus practice in which it supports and, when resources permit, authors amicus briefs for cases pending before the Supreme Court, Courts of Appeal, and state courts of last resort that involve issues impacting low-income consumers.
NCLC Litigation Resources on the Web. Go to nclc.org/litigation-tools for helpful litigation tools, including Ron Burdge’s consumer law attorney fee survey report and his consumer bankruptcy fee survey report and litigation guides for cases involving criminal justice debt.
This article draws on a past Class Action Symposium session on the Guidelines presented by Leah Nicholls, Beth Terrell, Seth Lesser, and Ira Rheingold. We thank them all for their insights.