Class Actions
Litigation, Crisis and Regulatory Communications Strategies for the Defense
High Stakes™ provides best practices for communicating on the most critical corporate, legal, and international issues of the day.
THIS ISSUE: CLASS ACTIONS
High Stakes™ provides best practices for communicating on the most critical corporate, legal, and international issues of the day.
THIS ISSUE: CLASS ACTIONS
Class actions raise the ante for crisis communicators because they are, quintessentially, public lawsuits. They begin with sweeps of the general population by plaintiffs’ firms seeking class members. And they are argued in the courtroom – and the media – as cases involving the victimization of thousands of claimants by allegedly cold, profit-obsessed corporate entities. When a story is framed by one party in this good versus evil way, it’s nearly impossible to keep it quiet.
Companies sued in class actions may lose millions in the courtroom, but those losses are often calculated and written off as a cost of doing business. By contrast, losses in the Court of Public Opinion can jeopardize a company’s very survival. The plaintiffs’ bar is light years ahead of the defense in using media in general, and the Internet in particular, to troll for clients, to influence potential jurors and - potentially - judges, and to cement the perception that defendants put profits ahead of public well-being.
Plaintiffs’ strategy typically revolves around the shaping of public perception. But there are best practices to ensure that plaintiffs’ efforts to try the case in public won’t do lasting damage to your brand:
- Practice the art of “low comment.” Low comment is the art – and it is an art – of providing influential information to the media in a way that seems responsive but does not jeopardize the case. If settlement is the goal, low comment can nurture good will via public apologies and resolutions to correct the problems that led to litigation. If total vindication is the objective, low comment is a hedge against plaintiffs’ efforts to sway consumers, investors, and potential jurors and judges through the media.
- Speak directly to your consumers and retailers. In class action litigation, every case development is either a potential communications boon or crisis. When facts are open to interpretation, don’t just rely on the media to deliver your messages for you. Speak instead to consumers via conduits where your messages cannot be adulterated or filtered. Depending on the legal facts of the matter, you can take out full-page advertisements in print and online publications. Create a blog with timely case updates and your latest actions to correct underlying problems. Never neglect the retailers who can be your first line of defense when consumers ask about product safety and reliability. Work to ensure that they echo your own sentiments word for word.
- Don’t Be an Entity. Several years ago, by a 3.5 to 1 margin, respondents to a Chrysler survey said that, if given no other facts, they could assume that companies embroiled in class actions are guilty. Class actions generate the perception that a whole human population is suffering at the hands of an indifferent entity. The first order of business for companies facing class actions should be to humanize themselves, showcasing the personal benefits of their work via employee and customer spokespersons. Doing so can turn the tables on plaintiffs who rely on anti-corporate preconceptions to pursue their objectives.
- Dominate the Internet. The plaintiffs’ bar has a huge head start online. They utilize pay-per-click campaigns that rank their messages at the very top when users search Google, Yahoo, or MSN for information on pending litigation. They blog frequently so that reporters have instant access to their insights and sound bytes. Their websites teem with links to enhance search engine optimization. To catch up, companies must first realize that they too have such tools at their disposal, and then make a powerful commitment to using them.
- Find the tipping point. After any class action litigation has been resolved, there’s a tipping point when the crisis is contained and the public ready to move forward. It is not the time to sit back in relief. It is an opportunity to begin branding again – to redefine yourself as a leader in preventing similar crises in the future. As Bill Marler points out in the interview below>>, companies that weather class actions are in a uniquely opportune position.
Industry Insight: Leading food-borne illness plaintiffs’ litigator Bill Marler, of Marler Clark
Attorney Bill Marler, of the Seattle-based firm Marler Clark, LLP, PS, is an accomplished personal injury lawyer and a major force affecting food safety policy in the United States and abroad. He and his partners have represented thousands of individuals in claims against food companies whose products have allegedly caused serious injury and death. During a career spanning three decades, Bill Marler has secured more than $300 million for his clients. He’s written for numerous legal publications and speaks on food safety issues around the world.
Here’s what he had to say about what class actions do to brands and how companies can best can move forward once they’re resolved. Key lessons from the other side…
Why is class action litigation so damaging to a corporate brand?
Bill Marler: First, let me say something about food-borne illness cases and class action litigation in general. In the last ten years, there have been very few class actions in the U.S. – I think you could count them on one hand – that have been brought in the context of food safety. It would seem that the two would go hand in hand, but the reality is that the injuries vary so much between individuals that it’s highly unlikely that a jury or court would ever certify a food-borne illness case as a class action.
That said, however, there are very few differences between the public communications dimensions of the food-borne illness cases I have litigated and your typical class action involving a corporate defendant. They are all high-profile. They all generate massive amounts of attention. And they all have a tremendous impact on public perceptions.
After a class action or other high-profile litigation has been resolved, do most companies do enough to reform the business practices that led to litigation in the first place?
Bill Marler: Some do, and some unfortunately do not. I was recently asked to pick the company that’s most interested in food safety today, and right off the bat I said Jack-In-The-Box. Somebody in the audience was surprised by my answer – presumably because Jack-In-The-Box is known for the first significant E. coli outbreak in the U.S. back in the 1990s – and asked me why. I responded by saying “Because I’ve only had to sue them once.”
Both during and after that litigation, Jack-In-The-Box embraced food safety in a way that a lot of companies who are repeat customers of mine never do. Jack-In-The-Box transformed its crisis into a leadership opportunity. Its VP in charge of food safety has been an open advocate of food safety and is always willing to share his time and expertise. The company has made people familiar with the safeguards it has implemented in its buying and preparation processes – to the point that those who pay attention are increasingly convinced that this corporate culture views safety as being as important, if not more important, than sales.
So, would it be fair to say that companies emerging from high-profile litigation actually have a greater opportunity to become leaders on the very issues that landed them in trouble in the first place?
Bill Marler: Absolutely. No question about it.
Please identify the most important audiences that a company emerging from high-profile litigation must engage to reinforce the perception that it is moving forward in a responsible manner.
Bill Marler: Clearly the consumer is the main target because you want to lure those folks back to a product they wanted before. If you employ a solid media message that shows contrition, demonstrates that you’ve learned from your mistakes, and drives home the point that you’re being transparent, you’re off to a good start.
Do you think it’s important to engage federal and state regulators as well?
Absolutely. Being regulated isn’t what most companies put on top of their Christmas list, but my view is that the relationship can be beneficial in two significant ways. First, if you ask for their input, they might give it to you and it might be useful in avoiding problems to begin with. Second, if you do solicit their advice and problems arise anyway, I’ve seen regulators go to bat for a company and say, “I was there. They’ve been trying. It must be a bad supplier.” In essence, you’ve cultivated a powerful ally by giving the regulators a stake in the effectiveness of your safety efforts.
If I were the Communications Director of a company emerging from high-profile litigation, what would be the three most important things for me to remember moving forward?
Bill Marler: I think that if a company hasn’t already identified the three most important things beforehand, it has probably already lost – because the plan needs to be implemented on Day One.
Bloggers and Class Actions
This blog, authored by Paul Karlsgodt of Baker and Hostetler LLP, is self-described as “dedicated to providing news, analysis, and commentary about class actions and class action law.” An ongoing focus on “the next big thing” in class actions provides intelligence as to what may be coming down the road.
Announcing Lies, Bribes & Peril: Lessons for the REAL Challenges of International Business
Lies, Bribes & Peril, a new book by international business authority Ron Cruse, is the quintessential guide to conducting business across political borders and cultural divides. Through rich story telling and meticulous attention to detail, Cruse’s above-the-board and under-the-table experiences in more than 80 countries present universally applicable lessons in manner that emphasizes the reader’s ability to put them to practical use. Order your copy today.>>
Class action litigation provides fodder for multiple blogging communities. Product safety advocates, legal commentators, and industry experts all opine on case developments, spinning the story as they go. What they are saying is a powerful clue to what the public will soon be thinking.
Here’s a look at the top high-authority blogs covering class actions and the companies they target:
CL&P/CSPI: Consumer Law & Policy Blog
With an emphasis on consumer law, this blog offers headlines, recall information, and legislative updates along with in-depth research and resources for consumers and consumer watchdogs. The CP&P Blog is hosted by the Public Citizen's Consumer Justice Project.
The Consumerist
This top blog is defined by its tagline: "Shoppers Bite Back." A popular favorite, The Consumerist reports on consumer issues, advocacy, litigation, and protections. It is an Ideal resource for breaking news, legal updates, and public opinion polling.
Class Action Blawg
Announcing Lies, Bribes & Peril: Lessons for the REAL Challenges of International Business
Lies, Bribes & Peril, a new book by international business authority Ron Cruse, is the quintessential guide to conducting business across political borders and cultural divides. Through rich story telling and meticulous attention to detail, Cruse’s above-the-board and under-the-table experiences in more than 80 countries present universally applicable lessons in manner that emphasizes the reader’s ability to put them to practical use. Order your copy today.>>Stop the Presses
Stop the Presses: The Crisis and Litigation PR Desk Reference – now in its second edition – is a survival manual for corporate leaders, board members, lawyers, and communications specialists. This book provides the dos and don’ts of crisis planning and communications and articulates the essential strategic guidelines for navigating myriad bet-the-company issues. Order your copy today.>>
Stop the Presses: The Crisis and Litigation PR Desk Reference – now in its second edition – is a survival manual for corporate leaders, board members, lawyers, and communications specialists. This book provides the dos and don’ts of crisis planning and communications and articulates the essential strategic guidelines for navigating myriad bet-the-company issues. Order your copy today.>>What’s Next? A continental class action shift
U.S.-styled class action litigation is making its way across the Atlantic and changing the way that European companies – as well American companies with European ties – must communicate with multiple stakeholders whenever mass tort litigation looms.
Be sure to monitor new European offices opened by plaintiffs’ firms. Once engaged, here are a few tips to bear in mind as the impending class action continental shift gains momentum.
- Attack the attorney rather than the plaintiffs themselves. The disastrous perception that whole populations suffer at the hands of a cold corporate entity will be all the more credible in Europe because of the relative novelty of class action litigation. But it’s a fresh field of combat for defendants as well, especially to question the motives of opposing counsel. Americans are accustomed to hearing that plaintiffs’ attorneys stand to make millions while class members may only see a few bucks. But for Europeans, that essential message could have reinvigorated impact. As U.S.-styled class action moves overseas, so too can U.S.-styled distrust of “trial lawyers.”
- Don’t speak through a legal mouthpiece. It took almost a century for American defense lawyers trying high-profile cases to understand that “no-comment” is all too often translated as “I’m guilty.” As discussed in strategies>>, “low comment” is almost always the preferable approach. Employ trained spokespeople and powerful third-party advocates to make your case in the media whenever possible. It’s a mistake to cede the Court of Public Opinion for fear of further liability in the courtroom – even, in some cases, when your own lawyers say otherwise.
Foreign Corrupt Practices Act:
Enforcement actions under the FCPA doubled between 2006 and 2007. Do you know how to limit liability and demonstrate full compliance?
Labor and Employment:
From strikes to wrongful discharge, labor and employment controversies are as emotionally charged as ever. Are you prepared to launch a real issues management campaign?
Accidents and Disasters:
Accidents test corporate mettle like few other crises. Can you communicate calmly, coolly, and collectedly when conditions are anything but?
More to come:
- Antitrust
- Board or Board Member Liability
- Coming to
America - Diversity
- Education
- Executives Behind Bars
- Food
- Global Capital Markets
- Intellectual Property
- Internal Communications
- Internal Investigations
- Monetizing Moments
- Money Laundering/Money Transfers
- New Media/Social Networking
- Product Liability
- Professional Services Crises
- Public Equity
- Whistleblowers
- Reputation Management – Celebrity
- Reputation Management – Corruption
- Reputation Management – SEC Investigations
- Tourism
- Trade
Next month’s focus: THE FOREIGN CORRUPT PRACTICES ACT