Pursuing class action litigation allows plaintiffs to seek compensation when filing an individual lawsuit would not be financially viable. In recent years, plaintiffs’ law firms in California have been aggressively pursuing class action cases under state law against companies nationwide. Targeted companies can face legal action in state and federal courts, and they can face substantial liability exposure.

Companies nationwide can face class action allegations under California state law. Several of California’s privacy and consumer protection laws apply to both in-state and out-of-state businesses, and they allow class members to seek compensation for a wide range of alleged statutory violations. Companies targeted in these lawsuits can face substantial liability exposure; and, while large corporations may be able to survive an unfavorable verdict, class action lawsuits can pose business-threatening risks in many cases.

While some of these lawsuits are filed in California’s state courts, companies can also face class action litigation in trial courts across the country. For companies targeted in putative class action cases, it is critical to assess their legal options promptly and then execute a comprehensive defense strategy that is tailored to the specific allegations, risks, and other circumstances at hand.

“From unfair business practices to wage and hour violations, companies nationwide can face class action lawsuits involving a wide range of allegations under California law. When targeted in these lawsuits, companies should promptly assess whether they have applicable insurance coverage, and they should engage experienced attorneys who can protect their interests throughout the litigation process.” – James Bell, Senior Trial Attorney Oberheiden P.C.

To successfully defend against a class action lawsuit under California law, targeted companies need to have a clear and comprehensive understanding of their risk exposure. This requires engaging defense counsel with extensive experience in these cases. When a large group of plaintiffs targets a common defendant, the liability exposure involved can be immense, and it is critical for the defendant to make informed and strategic decisions moving forward. While fighting to avoid liability may ultimately mean going to trial, with the right approach, it will be possible to secure a favorable pre-trial resolution in many cases.

Companies Nationwide Can Face Class Action Litigation Under California Law

Facing class action litigation under California law is not solely a risk for companies in the state. Companies nationwide can face class action litigation under California law. Increasingly, plaintiffs’ law firms from Los Angeles to San Francisco are targeting out-of-state companies in complex litigation—with claims ranging from personal injury and property damage to violations of consumers’ notice and privacy rights.

Common Types of California Class Action Cases

California consumer class action cases can (and do) involve allegations under several state statutes. Recently, some of the most common grounds asserted in these cases have included alleged violations of:

California Automatic Renewal Law (CAR)

The California Automatic Renewal Law (CAR) establishes compliance obligations for in-state and out-of-state companies that offer online subscriptions and other plans that are subject to auto renewal. Companies can face litigation related to CAR’s notice requirements, as well as its rules regarding consumers’ cancellation rights.

California Consumer Privacy Act (CCPA)

The California Consumer Privacy Act (CCPA) applies to covered entities that have websites which are accessible by California residents. It establishes strict rules and requirements pertaining to the collection and use of California residents’ private information, and violations of any of these requirements can potentially lead to high-stakes allegations.

California Invasion of Privacy Act (CIPA)

The California Invasion of Privacy Act (CIPA) has served as the basis for multiple class actions since its enactment in 1967. While CIPA was enacted to address privacy concerns related to wiretapping, today, plaintiffs’ law firms use this California state law to pursue claims related to online data tracking (and other similar claims) on behalf of their clients.

California Private Attorneys General Act (PAGA)

The California Private Attorneys General Act (PAGA) has become a frequent source of wage and hour class actions targeting companies with employees in the state. In PAGA litigation, class representatives can pursue allegations ranging from unpaid overtime to employee misclassification, and taking action under PAGA allows plaintiffs to pursue their claims in a cost-effective manner.

California’s Proposition 65 (Prop 65)

California’s Proposition 65 (Prop 65) also applies to companies nationwide. California’s appellate courts have consistently upheld Proposition 65’s requirements, and plaintiffs’ firms in California routinely represent clients in Prop 65 cases targeting all types of product manufacturers—as well as other companies involved in the supply chain.

Again, these are just examples. From false advertising and other deceptive practices to defective products, consumer class action lawsuits filed under California law can involve a wide range of other allegations as well. To level the playing field in these complex cases, targeted companies need to devote the necessary resources to their defense.

Defending Against a California Class Action Lawsuit Requires a Comprehensive and Strategic Approach

Defending against a California class action lawsuit requires a comprehensive and strategic approach. While targeted companies must develop and executive defense strategies that are tailored to the specific allegations and risks at hand, securing favorable results in class action cases generally involves:

1. Assembling a Class Action Defense Team

Successfully defending against a California class action lawsuit begins with assembling an experienced class action defense team. As co-lead counsel, targeted companies should choose lawyers who have proven experience in high-stakes litigation. While there are no guarantees, assembling a team with a track record of outstanding results in similar cases (i.e., a team of lawyers who have defeated class certification and obtained dismissal in relevant practice areas) can help maximize targeted companies’ chances of avoiding unnecessary costs, liability, and other adverse consequences.

2. Assessing the Validity of the Class Action Claim

After assembling a class action defense team, the next step is to assess the validity of the claim (or claims) at issue. Crucially, when evaluating class action claims, it may also be necessary to evaluate the company’s risk of facing related multidistrict litigation in some cases.

The purpose of this assessment is to gain an accurate understanding of the company’s risk exposure. Facing unfounded allegations of noncompliance and facing substantiated claims of specific statutory violations are two very different scenarios that require very different approaches.

3. Pursuing Early Litigation Strategies (Including Fighting Class Certification)

While some class action cases go to trial, the vast majority of these cases are resolved at the pre-trial stage. Whether they are resolved via dismissal or via settlement varies—and it is up to targeted companies and their defense counsel to determine what outcome they can reasonably expect to achieve under the circumstances at hand.

In the early stages of class action litigation, it will often make sense to focus on avoiding class certification. If the trial court denies certification, this can bring a swift end to the litigation before it truly begins in earnest.

4. Protecting and Leveraging the Company’s Rights During Discovery

If it is not possible to defeat class certification, then one of the next major opportunities for targeted companies is to protect and leverage their rights during discovery. Discovery can make or break a class action case—and a substantial portion of the class action litigation process will often be devoted to the discovery phase. If companies can effectively assert their rights to avoid disclosing harmful information unnecessarily (if such information exists), this can also help set the stage for a favorable pre-trial resolution.

5. Evaluating the Desirability and Viability of Settlement Negotiations

Companies targeted in class action lawsuits filed under California law should work with their defense counsel to assess both the desirability and viability of entering into settlement negotiations. When companies have grounds to fight plaintiffs’ allegations, they should not settle unnecessarily. At the same time, if it appears likely that the plaintiffs will succeed on the merits of their claims at trial, targeting a favorable settlement early in the process could prove to be the most cost-effective option under the circumstances at hand.

6. Preparing for Trial

In some cases, there will come a point at which it is in a targeted company’s best interests to begin preparing for trial. Failing to secure a favorable pre-trial resolution does not necessarily mean that a targeted company’s defenses will fail at trial—far from it. Verdicts for the defense in class action cases are not uncommon. When a negotiated settlement is a reasonable outcome, setting the stage for trial can often help to facilitate favorable settlement negotiations as well.

7. Continuing to Execute a Strategic and Tailored Defense as the Litigation Evolves

More often than not, class action defense is a marathon, not a sprint. With this in mind, targeted companies need to continue working with their legal counsel to execute a strategic and tailored defense as the litigation evolves. Different opportunities will present themselves in different scenarios and at different stages of the litigation process. By focusing not only on the substance of the plaintiffs’ allegations but also on the procedural aspects of class action litigation, targeted companies can maximize their opportunities for achieving favorable results before trial, during trial, and after trial if necessary.