Class Action Group Of The Year: Gibson Dunn
By Christopher Norton
Law360, New York (January 21, 2011) -- With big wins that included convincing the U.S. Supreme Court to hear an appeal of the certification of a class of Wal-Mart Stores Inc . employees, Gibson Dunn & Crutcher LLP earned a spot among Law360’s Class Action Groups of 2010.
Gibson Dunn's class action attorneys also served as the first line of defense last year for clients like Vestin Mortgage Inc., eHarmony and others.
The group’s high-water mark in 2010 was persuading the U.S. Supreme Court to take on its appeal of the certification order in the landmark Dukes v. Wal-Mart class action on behalf of female Wal-Mart employees.
“From the moment that class certification was granted in the trial court, most observers felt this case was likely to be headed to the Supreme Court eventually, regardless of what the Ninth Circuit said,” Gibson Dunn class action practice group head Gail Lees said.
The Supreme Court granted Gibson Dunn’s petition in December, following a ruling upholding the certification of the Dukes class that split the en banc U.S. Court of Appeals for the Ninth Circuit, 6-5.
The certification order was originally entered in 2004, and “the law since then has developed in a way that trends very much in our direction,” said Ted Boutrous, Gibson Dunn's point man for Wal-Mart.
Convincing the Ninth Circuit to grant en banc review of the case was a very significant step in itself, and Gibson Dunn came very close to prevailing, Boutrous said. The five dissenting judge were helpful because they put their fingers on the fundamental problems with the case, creating good groundwork as the case heads to the Supreme Court, he said.
“We, Wal-Mart and the defense side agree class actions can serve valuable purposes,” Boutrous said. "Too much enthusiasm for class actions, though, can boomerang and hurt everyone. We think that’s what’s happening here. We’re really pleased with the opportunity to seek clarification on these issues.”
Gibson Dunn plans to argue that the plaintiffs’ claims are highly individualized, fact-intensive and not typical of each other, according to Boutrous.
“This kaleidoscope of claims simply cannot be grouped together in any way that would allow for a fair adjudication,” he said. “No one could get a fair trial by trying to litigate these types of issues in one fell swoop.”
In another major victory, Gibson Dunn prevailed after an 11-day bench trial in two consolidated nationwide class actions for Vestin Mortgage, one of the nation's leading real estate-based fund managers, regarding alleged breaches involving publicly traded real estate investment trusts.
During the course of the litigation, Gibson Dunn defeated the plaintiffs' motion for summary adjudication, successfully moved to strike the plaintiffs' play for punitive damages and obtained dismissal with prejudice of the plaintiffs' tort claims. The court's verdict was a complete victory for Vestin, and the ruling adopted virtually all the arguments and findings of fact proposed by Gibson Dunn, the firm said.
“We managed to prove that the statement of business objectives had changed in one of the prospectuses, but that the company’s business objectives had not changed, and therefore it was not a roll-up, but a merger,” Gibson Dunn partner Bill Wegner said.
There was a bullet point missing under the list of business objectives that was in the private prospectus that simply fell out of the public prospectus, according to Wegner. It took a long trial to demonstrate the simple fact that there had been no change in the company’s business objectives, he said.
“This entire case was built on this missing bullet point,” Wegner said.
One of the biggest cases the class action group worked on in 2010 was not a class action at all, but rather the first 24 bellwether trials in a mass tort nuisance case based on allegations that a manufacturing facility was emitting an offensive odor that interfered with the plaintiffs’ value and enjoyment of their properties, about a mile away, Lees said.
“They are a real bugaboo to deal with,” Wegner said of such mass actions.
Gibson Dunn was able to establish the absence of any actual impact from the alleged odor on the plaintiffs’ daily lives, according to Lees. After two days of deliberation, the jury returned 24 individual verdicts in favor of the defendant.
To clinch the win, the firm put on expert testimony from a crowd psychologist and an odor psychologist, who explained why so many people could claim to smell the same odor that was not actually present.
“That will always stand out as some of the most fun, interesting and different testimony I’ve put on,” Wegner said.
In June, Gibson Dunn defeated class certification in a purported consumer class action against online matchmaking site eHarmony, in which the company was accused of misrepresenting its singles matching service by not telling customers that if they were subscribers they could be matched with nonsubscribers.
The firm immediately investigated the facts relating to the individually named plaintiffs, and was able to show the court the circumstances for each plaintiff to exemplify why the case could not be certified, Lees said.
Lees returned again and again to Gibson Dunn’s intense focus on the facts, which also carries through with the cases that go to trial, she said. It is crucial to develop the facts with respect to the plaintiffs at a very early stage, she said.
“By that intense factual focus, we are very often able to expose significant inconsistencies between the experience of those people and the allegations of the complaint,” Lees said.
“The thing that’s unusual about our class action practice is that we feel we’ve achieved a very strong win record in defeating class actions at all four pivotal spots,” she said, referring to the motion to dismiss stage, defeating class certification, winning summary judgment and the firm’s “overwhelming record” of winning at trial.
At the motion to dismiss stage, one of the firm’s most significant wins in 2010 was on behalf of General Mills Inc . in an action over the cholesterol-reducing properties of Cheerios, Lees said. The case was stayed in reference to the primary jurisdiction of the U.S. Food and Drug Administration .
Motions to dismiss in class cases tend to be directed not so much at a failure of pleading or an inability to state a claim, but rather on a core legal issue, according to Lees.
“Those are the arguments that we’ve found to be most successful,” she said.
In October, the firm successfully opposed class certification on behalf of International Paper Co . in a putative toxic tort class action in which the plaintiffs sought certification of a class of more than 1,500 homeowners whose property was allegedly contaminated and damaged by airborne emissions from IP's paper mill in Prattville, Ala.
The court agreed with Gibson Dunn's arguments that the plaintiffs' class definition was fatally flawed because it contained qualifications and exclusions that precluded an objective determination of class membership, according to Lees.
In May, the U.S. Court of Appeals for the Fifth Circuit affirmed a district court’s decision to dismiss with prejudice a putative class action against Chartis Inc. member company Lexington Insurance Co.
The first amended complaint at issue purported to assert claims under Louisiana's bad faith insurance statutes for Lexington's alleged wrongful denial or underpayment of insurance claims made by the putative class members after Hurricane Katrina made landfall in August 2005.
The Fifth Circuit agreed with Gibson Dunn's arguments that the plaintiffs had failed to plead facts in their first amended complaint sufficient to state a claim under the relevant Louisiana law in light of the pleading standard, Lees said.
The practice group also benefits from “tremendous appellate bench strength,” according to Lees, which contributed to an important win for Aetna Inc . in 2010, in a case that accused the company of conspiring to market a fraudulent health care plan. The judge granted Gibson Dunn’s motion to dismiss on the basis of lack of standing, and the Ninth Circuit affirmed.
“Despite the class action wins that we have reported here — or more likely because of them — the firm's core class action practice increased by more than 27 percent from 2009 to 2010, topping a 25 percent growth rate that we have seen each year since 2005,” Lees said of the practice group, which numbers around 95 attorneys.
The group recently added two top Texas class action litigators in the firm’s Dallas office, and further growth can be expected in 2011, “as filings continue unabated,” Lees said.