Antitrust and Unfair Competition Law

Diversity Can Tilt the Scales in Complex Class Leadership Appointments

Robert E. Connolly
Law Office of Robert E. Connolly

              When selecting lead class counsel in complex class action cases, Rule 23(g)(1)(A) of the Fed Rules of Civ. P. states that the court must consider, among other factors, “counsel’s experience in handling class actions,” “knowledge of applicable law” and ”the resources that counsel will commit to representing the class.”  Competing class leadership proposals often present a “tie” on these factors.  The court, however, may also consider “any other matter pertinent to counsel’s ability to fairly and adequately represent the interests of the class.” Fed. R. Civ. P. 23(g)(1)(B).  The extent of diversity of the proposed leadership team has become a factor used increasingly by courts to pick among otherwise acceptable competing proposals. On July 14, 2020, Judge James Donato of the US District Court for the Northern District of California denied the appointment of a proposed leadership team as class counsel, citing the lack of diversity of the team. While acknowledging the relevant experience and history of success of the team seeking appointment as interim co-lead counsel to represent the putative class of plaintiffs, Judge Donato wrote, “Even so, the Court is not prepared to appoint them at this time.  The Court is concerned about a lack of diversity in the proposed lead counsel.  For example, all four of the proposed lead counsel are men, which is also true for the proposed seven lawyers for the ‘executive committee’ and liaison counsel.”  Order Re Consolidation and Interim Class Counsel, In re: Robinhood Outage Litigation, 20-cv-01626-JD, Dkt. No. 59 at 3.  Judge Donato ruled “appointment of interim counsel is denied without prejudice to a further submission consistent with this Order.”  Id. 

              Judge Donato also noted that the proposed lead counsel team had enjoyed leadership positions in a number of other cases.  This “extensive experience” credential was a double edge sword.   While this experience would be helpful to the putative class, the Judge also remarked that, “leadership roles should be made available to newer and less experienced lawyers, and the attorneys running this litigation should reflect the diversity of the proposed national class.” Id.

              The Plaintiffs’ team promptly submitted a revised proposal requesting that the court appoint as interim co-lead counsel two attorneys who “come from diverse backgrounds that are underrepresented in lead counsel appointments….” Id. at Dkt. No. 62 at 8.  The memorandum then described the diversity co-lead counsel would bring to the team as well as opportunities for newer and diverse lawyers on the proposed Executive Committee.  Judge Donato approved the co-lead counsel appointment noting “Plaintiffs promptly filed an amended proposal that significantly broadened in multiple ways the diversity of the attorneys designated for the interim roles.”  Id. at Dkt. No. 65 at 1.

              In the case above, the Plaintiffs quickly amended their proposal and secured co-lead counsel positions. But because there often is competition for those positions, addressing diversity up front is important.  An example can be found in the competing leadership proposals in Breakwater Trading LLC v. JP Morgan Chase & Co. et al, Case No 1:20-cv-05360-PAE (S.D.N.Y).  Two groups of attorneys filed memoranda in support of appointment motions.  Both applications included a section in their memorandum addressing diversity under Rule 23(g)(1)(B).  The Memorandum in Support of Motion to Appoint Lowey Dannenberg and Kirby McInerney as Interim Co-Lead Counsel has a section: Diversity, Inclusion, Opportunity which recounts how “The Lowey/Kirby Team will provide substantial opportunities for lawyers from different backgrounds and experiences to assume leadership roles, supported by their firms at every stage.” (Id. at Dkt. No. 46 at 21.)  The competing team’s memorandum contains a section titled,Diversity Interests Would be Best Served by the Appointment of Nussbaum Law Group and Kessler Topaz.”  This section begins with “Diversity of opinion, sex, and national origin leads to better results in all business contexts.” (footnote omitted).  The memorandum highlights the leading role both female partners and associates would play in guiding the litigation.  Memorandum in Support of Breakwater Plaintiffs Motion for …Appointment as Interim Co-Lead Counsel, Case 1:20-cv-05285-PAE, at Dkt. No. 23 p.17-18.

              These cases follow a notable case in 2018 when US District Court Judge Manish Shah of the Northern District of Illinois, who is overseeing the multidistrict litigation over alleged manipulation of the Chicago Board Options Exchange’s volatility index, told counsel that he would be looking for details on team diversity in selecting interim lead counsel.[1]  Numerous lead counsel applications were filed.  Judge Shah appointed as co-lead counsel Kimberly A. Justice, now with Freed Kanner London & Millen LLC and Jonathan C. Bunge of Quinn Emmanuel Urquhart & Sullivan, LLP.[2] 

              Competition can be intense for lead counsel positions in complex class action litigation.  The court often must select from competing proposals from several firms, any one of which meet the technical qualification to assume the leadership role.  Proposing a diverse lead counsel and executive committee team allows the court to see that the proposed team would mirror the diversity of the proposed class.  Diversity also has the added benefit of bringing new talent into the process addressing a court’s potential concern of the “repeat player” problem raised by Judge Donato.

Note:  For further information see Bolch Judicial Institute, Duke Law School, Guidelines and Best Practices for Large and Mass-Torts MDLS, (Second Edition), Best Practice 4E at 45-46 (“The transferee judge should take into account whether the leadership team adequately reflects the diversity of legal talent available and the requirements of the case.), available at https://judicialstudies.duke.edu/wp-content/uploads/2018/09/MDL-2nd-Edition-2018-For-Posting.pdf.   


[1] See Lauraann Wood, VIX MDL Lead Should Have Young, Diverse Attys, Judge Says, Law360 (July 11, 2018), available at https://www.law360.com/articles/1062197.  For an article defending Judge Shah’s consideration of diversity as a factor in appointing leadership counsel, see Kellie Lerner and Chelsea Walcker, Law 360, August 15, 2018, Judges Can Demand Diversity in Rule 23(g) applications, available at https://www.law360.com/articles/1073189/judges-can-demand-diversity-in-rule-23-g-applications.

[2] See In re: Chicago Board Options Exchange Volatility Index Manipulation Antitrust Litigation, No 1:18-cv-4171; Order Appointing Plaintiffs’ Leadership Counsel August 16, 2018 Dkt # 119.

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