Opinion ID: 769834
Heading Depth: 3
Heading Rank: 4

Heading: Brett Baffa

Text: 21 The district court rejected Brett's motion to intervene as class representative based on inadequacy of his counsel, his lack of knowledge of the claims and failure to frequently communicate with his lawyer about the lawsuit. See Baffa, 185 F.R.D. at 175. Although our review of the denial of Brett's motion for intervention is narrow, we need not afford the district court the same degree of deference when, as here, it has denied class status through erroneous application of the law. 4 See Marisol A. v. Giuliani, 126 F.3d 372, 375 (2d Cir. 1997) (failure to adhere to proper legal standards is abuse of discretion). 22 In analyzing Brett's intervention motion, the district court focused on defendants' contention that Brett could not be an adequate class representative. The district court considered the adequacy of the class representative under Rule 23(a)(4), noting that the requirement applies to both the proposed class representative as well as to their retained counsel. Baffa, 185 F.R.D. at 175, citing Marisol, 126 F.3d at 378. The court then went on to emphasize that in cases where the competency of the class representative is questioned, the adequacy of counsel takes on added significance. Baffa, 185 F.R.D. at 175, citing In re TCW/DW N. Am. Gov't Income Trust Sec. Litig., 941 F. Supp. 326, 340-41 (S.D.N.Y. 1996). To meet the adequacy requirement, the court stated, named plaintiffs must not have interests in conflict with those of the class and must have qualified counsel. Baffa, 185 F.R.D. at175, citing Marisol, 126 F.3d at 378. Noting that there was no conflict of interest allegation, and having determined that counsel was inadequate due to the sanctions previously imposed, the district court then turned to address defendant's challenge to Brett's intervention based on his lack of knowledge of the case. 23 Generally, adequacy of representation entails inquiry as to whether: 1) plaintiff's interests are antagonistic to the interest of other members of the class and 2) plaintiff's attorneys are qualified, experienced and able to conduct the litigation. See In re Drexel Burnham Lambert Group, Inc., 960 F.2d 285, 291 (2d Cir. 1992). Defendants did not suggest that Brett's interests were antagonistic to the interest of the other class members. Moreover, as we have already stated, because we have vacated the sanctions order, inadequacy of counsel was not a proper basis for denying Brett's motion. However, because the adequacy of representation by counsel is so intertwined with the question of adequacy of the class representative, we find more compelling the need to examine the district court's rationale for denying Brett's motion. Appellants challenge the district court's denial of Brett's motion on grounds that he lacked adequate knowledge of the case. Appellants argue that Brett has sufficient knowledge of the case, wishes to pursue the claims, and is not merely lending his name to the lawsuit. Because we are concerned whether the district court applied the proper legal standard, we consider the knowledge rules in greater detail. 24 The district court cited In re TCW/DW for the proposition that where the competency of the class representative is questioned, the adequacy of counsel takes on added significance. Baffa, 185 F.R.D. at 175. The court further invoked In re TCW/DW for the rule that in complex securities litigation, named plaintiffs are not expected to possess expert knowledge of the details of the case and must be expected to rely on expert counsel. See id. Nevertheless, the district court concluded that Brett's lack of knowledge regarding basic facts of the case rendered him inadequate. 25 However, we note that in reaching this conclusion, the district court failed to consider In re TCW/DW's further observation that the motivation behind requiring representative plaintiffs to demonstrate great familiarity with the case is a fear that the representatives, during pretrial discovery and at trial, will give misleading and contradictory testimony with regard to basic issues in the case that might make their claims subject to unique defenses. In re TCW/DW, 941 F. Supp. at 340, citing County of Suffolk v. Long Island Lighting Co. (LILCO), 710 F. Supp. 1407, 1413 (E.D.N.Y. 1989), aff'd., 907 F.2d 1295 (1990). [I]n that situation, the challenge to class certification can alternatively be viewed as a challenge to the representative plaintiffs' compliance with the typicality requirement of Rule 23(a)(3). In re TCW/DW, 941 F. Supp. at 340. 5 Instead of applying the knowledge requirement with a view toward typicality concerns, however, the district court unfortunately seized on a myopic view of the knowledge requirement and concluded that Brett did not have a basic understanding of the litigation and therefore could not be an adequate class representative. 26 We are not convinced that such a harsh application of the rules is appropriate, especially in the circumstances of this case. The Supreme Court in Surowitz v. Hilton Hotels Corp., 383 U.S. 363, 370-374 (1966) expressly disapproved of attacks on the adequacy of a class representative based on the representative's ignorance. To the extent that Brett relies on his father and lawyer for advice, appellants argue that should not disqualify him as class representative. We agree, especially since the district court's findings regarding the plaintiff's counsel were based on the sanctions order which we vacated. Under Rule 23(a)(4), a class representative must fairly and adequately protect the interests of the class. Thus, class representative status may properly be denied where the class representatives have so little knowledge of and involvement in the class action that they would be unable or unwilling to protect the interests of the class against the possibly competing interests of the attorneys. Maywalt v. Parker & Parsley Petroleum Co., 67 F.3d 1072, 1077-78 (2d Cir. 1995). 27 We disagree with the district court's conclusion that the answers Brett gave at his deposition should prohibit him from intervening, inasmuch as there is no showing that he is unwilling or unable to pursue the litigation on behalf of the class. Although Brett was only eighteen, and had only recently completed the process of taking over the UGMA account, he understood the nature of his proposed role in the litigation and demonstrated his willingness to carry it forward. When he was shown his signature on the certificate, he was able to explain that it indicated his willingness to accept the responsibility to represent a class during the court for Rickel's, the bonds. I would be a representative, a plaintiff of a class. Moreover, Brett should not be penalized for having met with his attorneys only a couple of times. Indeed, the district court seems to have overlooked the substance of these meetings and concentrated more on how many times Brett saw his attorneys, rather than what was accomplished during their meetings. During those meetings, Brett reviewed and signed the amended complaint. In addition, he reviewed the financial information therein which was central to the fraud allegations he would be asserting on behalf of the class. Brett also participated in meetings with the accounting expert who reviewed the financial data. Thus, the record in this case does not support the district court's conclusion that Brett has not displayed a willingness to stay abreast of the litigation, as demonstrated by his vague or complete lack of recall of material issues during his deposition. Baffa, 185 F.R.D. at 176. 28 Also relevant to the question of Brett's adequacy as class representative is whether he has the knowledge to be able to protect the interests of the class. The record shows that he understood that the Rickel investments were the subject of this litigation; he understood that he and others had sustained a loss due to the alleged fraud; and he understood that he could continue to rely on the expert for advice in accounting matters. The acknowledgment of advice and support from both his father and his attorneys cannot support a conclusion that Brett is unable to pursue the litigation on behalf of the class. Far from showing Brett's ignorance of the litigation or his inability to serve as class representative, it demonstrates Brett's ability to appreciate the limits of his knowledge and rely on those with the relevant expertise. Finally, the record reflects that Brett understood the Rule 11 sanctions, another basis for the district court's decision. 29 In sum, we conclude that the district court misapplied the adequacy rules to block Brett's intervention as class representative. Accordingly, we vacate the order of the district court denying Brett Baffa's motion to intervene and remand for further consideration of that question in a manner consistent with this opinion.