On The Case

11th Circuit concerned about 'ghostwritten' opinion but likely to approve $380.5 million Equifax deal

The judges of the 11th Circuit U.S. Court of Appeals who heard arguments on Tuesday by objectors to a $380.5 million settlement of data breach claims against the credit reporting firm Equifax Inc seemed troubled that the trial judge who approved the settlement may have adopted verbatim an undocketed, ex parte opinion drafted by class counsel.

It also seems unlikely, though, that the 11th Circuit will ditch the settlement, which class counsel Kenneth Canfield of Doffermyre Shields Canfield & Knowles and Equifax counsel David Balser of King & Spalding touted as a historic deal that delivers identity-theft protection to millions of consumers and has been blessed by state and federal regulators.

Ted Frank of the Hamilton Lincoln Law Institute, Eric Isaacson of the Law Office of Eric Alan Isaacson and pro se objector Shiyang Huang offered the appeals court several reasons to undo the settlement.

Huang and Isaacson argued that the class of 147 million consumers should not have been certified without tangible proof that name plaintiffs met constitutional standing requirements.

Frank told Judges Beverly Martin, Andrew Brasher and Britt Grant that the deal was fatally flawed because of intraclass conflicts. The nationwide settlement was based on Equifax’s alleged negligence, but Frank argued that class members from some states had valuable statutory claims under state data privacy laws. Those class members, he said, should have been represented by separate counsel as a subclass.

The standing and conflict arguments prompted some questions from Brasher, who seemed intrigued by the assertion that class counsel must provide proof of standing, beyond mere allegations in a complaint, to be certified. He also pressed Canfield and Balser about Frank’s argument that the trial judge, U.S. District Judge Thomas Thrash of Atlanta, should have ordered subclasses. Canfield and Balser both said Thrash, who has significant experience overseeing data breach class actions, determined there was no intraclass conflict and thus no need for subclasses.

By far the most animated moments of the argument, which stretched for more than an hour on Zoom, concerned the draft opinion written by class counsel at the request of the trial judge. As I've explained, Thrash originally granted approval of the Equifax settlement in an oral order he delivered from the bench after a fairness hearing in December 2019. At the hearing, the judge asked class counsel to memorialize his decision in a proposed order.

That draft opinion, as Canfield acknowledged to the 11th Circuit in Tuesday’s argument, was circulated to Equifax counsel but not to objectors. The draft was not published in the case docket.

Thrash eventually issued a 122-page written opinion that was harshly critical of Frank and other objectors. In early 2020, Frank litigated unsuccessfully before a motions panel at the 11th Circuit to force disclosure of the draft opinion, suggesting that Thrash may have simply adopted an opinion ghostwritten by class counsel.

Early in Tuesday's argument, 11th Circuit Judge Martin asked Frank about the appellate court's precedent in In re Colony Square, in which the 11th Circuit in 1987 said it "strongly disapproved" of a federal bankruptcy judge signing his name to orders ghostwritten by an insurance company – but nevertheless upheld the orders.

“We tell district judges not to do this, and then we let them do it,” Martin said.

Her panel colleagues, however, seemed more troubled by the possibility that Thrash adopted a ghostwritten opinion that was not shown to objectors or entered in the public docket.

“Why in the world shouldn’t the draft order have been published on the district court docket?” Grant abruptly asked Canfield. When Canfield said class counsel would have stipulated to publication of the ex parte order if objectors had agreed not to use it as ammunition on appeal, a skeptical Grant replied, “Is that the rule, that if an order would cause a party to object, the court doesn’t need to enter it on the record?”

Canfield argued that trial courts in the Northern District of Georgia routinely request ex parte draft opinions from the winning side. Brasher, who was a trial judge in Alabama before his elevation to the 11th Circuit, responded, “I was a district court judge and I got those proposed orders – but the other side was always copied.”

Brasher later told Frank it was “concerning” that Thrash did not show the proposed order to objectors before issuing an opinion that included a far more scathing critique of the Equifax objectors than the trial judge’s ruling from the bench.

Even Equifax counsel Balser conceded that the ex parte opinion was a problem. “I know this is an issue that’s on the panel’s mind,” he said. “And Judge Martin, you’re right. The court has said repeatedly you shouldn’t do this.”

None of the judges, though, seemed to bite at arguments by Frank and Isaacson that settlement approval should be reversed if the trial judge relied on a ghostwritten opinion. Canfield and Balser, meanwhile, argued that regardless of who drafted the written opinion, Thrash had already approved the settlement from the bench, signaling independent decision-making.

Equifax counsel Balser declined to provide a statement. Isaacson, who took great umbrage in his rebuttal to Balser’s comment that some Equifax objectors “have been found to have engaged in extortionate efforts,” said by email ” that it was “disappointing that a lawyer of Mr. Balser’s stature would stoop to ad hominem attacks.” Isaacson, who has recently prevailed for objectors in two 11th Circuit rulings said he was encouraged by the judges’ attention to the undisclosed ex parte draft opinion.

Pro se objector Huang said oral argument confirmed that plaintiffs have not established a constitutional right to sue. Frank said by email that the court should impose consequences for Thrash’s conduct. “No appeals court has ever permitted a district court to do anything close to what the district court did here without reversing, especially in the class action context,” he said.

Class counsel said the deal should be upheld. “We remain confident that the 11th Circuit will affirm the final approval order in all respects, and we look forward to implementing this historic settlement,” they said in an email statement.

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This story has been updated to include comment from objectors’ counsel Isaacson. A previous version incorrectly reported that he did not respond to an email.