Updated 2014 by Sarah Somers
When engaging in strategic litigation planning, counsel must determine whether the case can and should be brought as a class action. The ramifications of filing a case as a class action must be carefully considered and discussed with the potential class representative(s). Counsel must initially determine whether the case meets the requirements for a class action. If these requirements are likely to be satisfied, several additional considerations are relevant in deciding whether to bring a case as a class action: (1) can the case be won; (2) are there sufficient resources to bring a class action; (3) does having a class facilitate bringing a case to judgment; (4) is a class necessary for relief?
7.1.A. Probability of Success on the Merits
Counsel’s assessment of the strength of a case on the merits is always a factor in deciding whether to bring a case, whether framed as a class action or not.1 However, a judgment in a class action will likely have preclusive effect for the class on class members named or described in the judgment.2 If plaintiffs win, relief will benefit all affected individuals, including class members with very small claims who might not otherwise sue. However, if plaintiffs lose, the judgment has claim-preclusive effect on all class members and those in privity with them unless absent class members are subsequently able to establish lack of jurisdiction. lack of notice or inadequate representation.3 The potential for claim preclusion underlies the fundamental due process issues inherent in class action practice.
Assessing the likelihood of success on the merits is a key factor in deciding both whether to bring a case as a class action and how broadly to define the class geographically. Assessing the likelihood of winning involves not only an analysis of the law, but also a critical look at the way the courts in the plaintiffs’ jurisdiction are ruling on the type of issues presented in the case. If the trial and appellate courts in your jurisdiction are not likely to be sympathetic to the issues raised, bringing a case as an individual action and leaving class litigation of those issues to another jurisdiction might be preferable.
Another factor to consider is whether your program has sufficient resources to bring the class action. On the one hand, if the issue is not litigated as a class action, a systemic problem may remain unresolved, and numerous individual cases may have to be brought. This results in duplicative effort. On the other hand, bringing a class action commits program resources to a time-consuming, frequently long-term lawsuit in which zealous representation requires fully litigating the interests of the entire class. This type of litigation often requires substantial out-of-pocket expenses for discovery, class notification, and experts, only some of which may be recoverable after judgment.4 As a result, counsel should give consideration to seeking co-counsel from private law firms.5
7.1.C. Effects on the Litigation Process
The third set of considerations relates to how a certified class affects the process of bringing the case to judgment. These considerations include the possibility that claims are or will become moot; the scope of discovery allowed; media exposure, and the likelihood of an appeal. Most important is the possibility that the named plaintiff’s legal issue will be resolved, thereby requiring a class to avoid mootness.6 If concern about mootness is the only reason to bring a class action, counsel should assess whether it could be avoided some other way, such as by joining several plaintiffs or by bringing a claim for damages, including nominal damages.7
Further, in a class action, a plaintiff class may be allowed much broader discovery than an individual party. However, filing a case as a class action may also result in more vigorous discovery of the named plaintiff(s), particularly on issues relating to plaintiff’s adequacy of representation, typicality, and knowledge of the meaning of class representation. Thus, the named plaintiff must be fully aware of the implications and potential conflicts involved in serving as a class representative.8 Likewise, in Rule 23(b)(3) actions, where the class is based on commonality, defendants may seek discovery of absent class members.9 Such discovery and delays inherent in litigating class certification might substantially postpone relief for class representatives.
Filing a class action may allow more opportunities for media exposure and public education and awareness about the issues of the case. On occasion, this coverage can be helpful in surfacing witnesses or other useful evidence. In some cases, however, it may create a public backlash that might harm the named plaintiffs’ case. Named representatives should be prepared to have the glare of publicity focused on them personally.10
Finally, counsel should consider the likelihood that defendants will appeal the case. Defendants may be more likely to appeal an adverse judgment in a class action than in an individual case. Indeed, Rule 23(f) of the Federal Rules of Civil Procedure permits interlocutory appeals of class certification decisions, with a possibility of a stay pending appeal. This issue must be discussed with the named plaintiffs.
7.1.D. Effects on Relief
Several issues relating to relief are critical considerations in deciding whether to bring the case as a class action. These include whether to seek preliminary relief on behalf of named plaintiffs or the class, how tolling of the statute of limitations affects plaintiffs or class claims, and settlement negotiation.
Bringing a class action requires counsel to decide whether to request preliminary relief for the named plaintiffs or for the entire class. In cases where the plaintiff requires an immediate remedy, a class action may not be a viable alternative. If preliminary relief is requested only for the named plaintiffs, filing the case as a class action may delay a ruling on individual preliminary relief or create a disincentive for the defendant to agree to preliminary relief for the named plaintiff. It may also suggest a lack of commonality between the named plaintiffs’ claims and those of absent class members. These issues must be resolved with the named plaintiffs before deciding whether to bring a class action suit.
Filing a case as a class action tolls the statute of limitations for individual claims during the pendency of the class action until class certification is denied, at which time the statute begins running again.11 However, tolling can be denied if plaintiffs’ claims are not stated with enough specificity to put the defendants on notice of potential liability.12 To benefit from this rule, the classes must be defined with precision so that the defendants are on notice that the claims will be tolled as to that class.13
Litigation strategy and settlement negotiations may create potential conflicts between the named plaintiffs and the class. The general rule is that named plaintiffs have a fiduciary duty to absent class members and are not allowed to abandon their representation or settle in such a way that significantly prejudices the class.14 At the same time, named plaintiffs may be responsible for regular and lengthy monitoring of the decree or judgment on behalf of the class.15 These problems are certainly not insurmountable, but they must be carefully discussed with the named plaintiffs before filing. Following this discussion, a retainer should be signed which should detail the agreements made on settlement, negotiation, attorney fees, commitments regarding appellate representation, and provisions for terminating representation.
Updated 2014 by Sarah Somers
- 1. An assessment of the probabilities of success on the merits must include an evaluation of whether the complaint can surmount the pleading standards imposed by Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009) and Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), discussed in detail in Chapter 4.1 of this MANUAL. For a discussion of pleading in the class action context, see Robin Effron, The Plaintiff Neutrality Principle: Pleading Complex Litigation in the Era of Twombly and Iqbal, 51 Wm. and Mary L. Rev. 1997 (May, 2010).
- 2. Fed. R. Civ. P. 23(c)(3). See Reppert v. Marvin Lumber and Cedar Co., Inc., 359 F.3d 53 (1st Cir. 2004) (claim preclusion assessed under state law and can include unlitigated claims arising from the transaction or occurrence previously litigated). The preclusive effect of a judgment in a class action can only be determined by the court in a subsequent suit which raises the issue. Advisory Committee Notes, Rule 23 (1966). Class action judgments may also have issue preclusive effect in subsequent cases raising the identical issue. Cooper v. Fed. Reserve Bank of Richmond, 467 U.S. 867 (1984). For a discussion of whether certain absent class members or those opting out of a Rule 23(b)(3) class may benefit from a class action judgment in subsequent litigation, see 7 AA Wright & Miller, Federal Practice and Procedure § 1789 at 560-63 (3rd ed. 2005). For a thorough discussion of preclusion in class actions, see Tobias Barrington Wolff, Preclusion in Class Action Litigation, 105 Colum. L. Rev. 717 (2005).
- 3. See Smith v. Bayer Corporation, 131 S. Ct. 2368, 2379, 2382 (2011) (holding federal court decision denying class certification did not have preclusive effect on state court deciding same question in suit brought by different plaintiff because federal standard for certification differed from state law standard). Cf. Philips Petroleum Co. v. Shutts, 472 U.S. 797 (1985) (examining state class action rule). For a discussion of the applicability of Shutts to federal class actions in general and specific Rule 23(b) actions in particular, see Wright and Miller, supra note 2, § 1789.1 at 575-84; see also Pelt v. Utah, 539 F.3d 1271, 1287-89 (10th Cir. 2008) (finding inadequate representation despite adequate notice in Rule 23(b)(2) class); Adams v. Southern Farm Bureau Life Insurance Company, 497 F.3d 1276, 1285-89 (11th Cir. 2007) (notice adequate and release precludes subsequent litigation).
- 4. See generally 28 U.S.C. §§ 1911 et seq. and 42 U.S.C. § 1988.
- 5. For example, the American Bar Association’s Litigation Section has a Standing Committee on the Delivery of Legal Services, which makes grants to assist with fundraising projects. The Impact Fund also grants up to ,000 to assist groups in bringing certain kinds of law reform cases.
- 6. See Chapter 3.3 of this MANUAL.
- 7. Bringing a class action lawsuit with a prompt motion to certify the class may resolve the mootness issue, but it will not solve the standing issues of City of Los Angeles v. Lyons, 461 U.S. 95 (1983). See Chapter 3.1 of this MANUAL.
- 8. See generally, Federal Judicial Center, Manual for Complex Litigation (Fourth) at § 21.141. A conflict may arise between the plaintiff and the class in settlement negotiations where defendants attempt to settle the individual claims without providing class relief. See Section 4 of this Chapter.
- 9. Taking discovery of absent class members is the exception, not the rule, but nonetheless well established. See Clark v. Universal Builders, 501 F.2d 324, 341 (7th Cir.), cert. denied, 419 U.S. 1070 (1974); Withers v. eHarmony, 267 F.R.D. 316 (C.D. Cal. 2010).
- 10. See discussion of choosing plaintiffs, Section 4 of this Chapter.
- 11. Crown Cork and Serial Co. v. Parker, 462 U.S. 345, 352-54 (1983); Am. Pipe and Constr. Co. v. Utah, 414 U.S. 538, 553 (1974). There is a circuit split on whether the statute is tolled for individual claims filed by class members pending a class certification decision. Wyser-Pratte Mgmt. Co. v. Telxon, 413 F.3d 553, 569 (6th Cir. 2005) (no tolling); State Farm Mut. Auto. Ins. Co. v. Boellstorff, 540 F.3d 1223, 1235 (10th Cir. 2008) (tolling permitted); Phillips v. E.I. DuPont de Nemours & Co. (In re Hanford Nuclear Reservation Litig., 521 F.3d 1028, 1038 (9th Cir. 2008) (same); California Pub. Employees Ret. Sys. v. Caboto-Gruppo Intesa BCI (In re WorldCom Sec. Litig., 496 F.3d 245, 252-56 (2d Cir. 2007) (same). See also Police and Fire Department Retirement System of City of Detroit v. IndyMac MBS, Inc., 721 F.3d 95, 109 (2d Cir. 2013) (holding American Pipe tolling rule does not apply to statutes of repose); Casey v. Merck & Co., 678 F.3d 134, 138 (2d Cir. 2012) (finding no American Pipe tolling because there is no such doctrine under state law).
- 12. Williams v. Boeing Co. 517 F.3d 1120, 1131 (9th Cir. 2008); Davis v. Bethlehem Steel Corp., 600 F. Supp. 1312 (D. Md. 1985), aff d, 769 F.2d 210 (4th Cir. 1985). See also 2 William Rubenstein, Alba Conte & Herbert B. Newberg, Newberg on Class Actions § 6:3 (4th ed. 2002 & Supp. 2010) (discussing tolling rule for subsequent class actions).
- 13. Dunn v. City of Chicago, 231 F.R.D. 367 (N.D. Ill. 2005).
- 14. See Blanchard v. Edgemark Financial Corp., 175 F.R.D. 293, 298 (N.D. Ill. 1997) (named plaintiff voluntarily accepts a fiduciary obligation toward the class that may not be abandoned at will or by agreement with the defendant if prejudice to the absent class members would inhere or if the class representative exploited the class action procedure for his own personal gain). See also London v. Wal-Mart Stores, 340 F.3d 1246, 1254-55 (11th Cir. 2003); In re W. Union Money Transfer Litig., Civ. No. 01-0335, 2004 U.S. Dist. LEXIS 29377, at *50-54, 2004 WL 3709932 (E.D.N.Y. Oct. 19, 2004).
- 15. Some of these cases continue for decades. See, e.g., Evans v. Fenty, 701 F. Supp. 2d 126 (D.D.C. 2010); LaShawn A. v. Fenty, 701 F. Supp. 2d 84 (D.D.C. 2010); Salazar v. District of Columbia, 729 F. Supp. 2d 257 (D.D.C. 2010).