Chapter 7: Class Actions

Updated 2014 by Sarah Somers, 2015 by Jeffrey S. Gutman

This chapter discusses a range of issues related to class action practice./1/ Legal aid lawyers historically have used class actions to obtain relief for large groups of clients in a broad range of substantive areas. Since 1996, however, organizations funded by the Legal Services Corporation (LSC) have been barred from bringing or participating in class actions and must explore other approaches for systemic relief, such as declaratory judgment actions./2/ Nonetheless, for those attorneys able to bring class actions, this chapter reviews the strategic considerations underlying the decision whether to bring a class action. It then discusses the class certification requirements set forth in Rule 23 of the Federal Rules of Civil Procedure, including amendments adopted in 2003, /3/ how to define and manage the class action, and settlement issues.

In addition, in February 2005, the Class Action Fairness Act of 2005 (CAFA) was signed into law./4/ CAFA was passed in an effort to limit forum shopping for perceived abuses of the class action mechanism in state courts seen as plaintiff–friendly. The CAFA expands federal jurisdiction over class actions by requiring only minimal diversity in cases in which the amount in controversy, defined as the aggregated claims of individual class members, exceeds $5 million./5/ The broad removal provision allows removal by home state defendants and does not require the consent of all defendants./6/ In addition, the court may decline to exercise jurisdiction over class actions in which over one-third but less than two-thirds of the proposed plaintiff class and the primary defendants are citizens of the state of filing upon consideration of several factors set forth in the statute./7/ Not always consistently, the federal appellate courts are deciding a range of jurisdictional issues arising from the CAFA./8/  If such issues come up in your practice, consult your circuit's most recent decisions on them.

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1. Excellent materials are available for more in-depth review of the matters covered in this chapter. See 4 William Rubenstein, Alba Conte & Herbert B. Newberg, Newberg on Class Actions (4th ed. 2002 & Supp. 2012); 7-7B Charles A. Wright et al., Federal Practice and Procedure (3d ed. 2005 & Supp. 2012); 3B James Wm. Moore et al., Moore's Federal Practice (3d ed. 1997 & 2013); National Consumer Law Center, Consumer Class Actions (8th ed. 2013); Federal Judicial Center, Manual for Complex Litigation (Fourth) § 21 (2004). 

2. See 42 U.S.C. § 2996e(d)(5); 45 C.F.R. § 1617.3. However, LSC program attorneys may represent individual clients “seeking to withdraw from or opt out of a class or obtain the benefit of relief ordered by the court, or non-adversarial activities, including efforts to remain informed about, or to explain, clarify, educate or advise others about the terms of an order granting relief.” 45 C.F.R. § 1617.2(b)(2). See Chapter 9.3 (declaratory judgments) and Chapter 1.4.C. (impact litigation under the restrictions) of this Manual. See also  Ilisabeth Smith Bornstein, From the Viewpoint of the Poor: An Analysis of the Constitutionality of The Restriction on Class Action Involvement By Legal Services Attorneys, 2003 U. Chi. Legal F. 693 (restriction on class actions unconstitutional).

3. These changes addressed four areas: the timing of class certification under Rule 23(c)(1); the notice provisions in Rule 23(c)(2); the settlement-review process in Rule 23(e); and the addition of two new subdivisions regarding the appointment of class counsel (Rule 23(g)) and attorney’s fee awards (Rule 23(h)).

4. Class Action Fairness Act of 2005 (CAFA), Pub. L. No. 109-2, 114 Stat. 4 (primarily codified at 28 U.S.C. § 1332 (diversity) and § 1453 (removal)). See Nan Ellis, Class Action Fairness Act of 2005: The Story Behind the Statute, 35 J. Legis. 76 (2009).

5. 28 U.S.C. § 1332(d)(2), (6). See National Consumers League v. General Mills, Inc., 680 F. Supp. 2d 132 (D.D.C. 2010) (holding nonprofit group action alleging false representation was not “mass action” removable under CAFA because it falls under exception to CAFA for suits brought by general public).

6. 28 U.S.C. § 1453(b).

7. 28 U.S.C. § 1332(d)(3).  The district court is required to decline jurisdiction over class actions that bear the characteristics listed in 28 U.S.C. § 1332(d)(4). For a useful guide for the management of class actions written for judges after the CAFA, see Barbara J. Rothstein & Thomas E. Willging, Managing Class Action Litigation: A Pocket Guide for Judges, Federal Judicial Center (3rd ed. 2010).

8. The Supreme Court has issued opinions in three cases interpreting the CAFA:

In Dart Cherokee Basin Operating Company v. Owens, 135 S. Ct. 547, 551 (2014), the Supreme Court held in a CAFA case that the defendant's notice of removal need only allege plausibly that the $5 million amount in controversy requirement is met. It need not supplement those allegations with evidence showing the amount in controversy.

In Mississippi ex rel. Hood v. AU Optronics Corporation, 134 S. Ct. 736 (2014), the State of Mississippi sued liquid crystal display manufacturers on state antitrust and consumer protection grounds in state court. The defendants removed the case to federal court on the ground that the case was a "mass action" under 28 U.S.C. § 1332(d)(11)(B)(i). Reversing the Fifth Circuit, the Supreme Court disagreed, holding that a "mass action" requires monetary claims to be brought by 100 or more plaintiffs and, here, there was only one named plaintiff -- the State. The case, therefore, should be remanded to state court.

The CAFA gives federal district courts original jurisdiction over class actions in which the matter in controversy exceeds $5 million in sum or value. 28 U.S.C. §§ 1332(d)(2), (5). In Standard Fire Insurance Company v. Knowles, 133 S. Ct. 1345 (2013), the Supreme Court held that a putative class representative cannot, prior to certification, stipulate that he and the class would seek less than $5 million to avoid removal in a case in which the federal court otherwise determined that the amount in controversy was satisfied.

Updated 2014 by Sarah Somers, 2015 by Jeffrey S. Gutman

7.1 Whether to Bring a Class Action

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.

7.1.B. Resources

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.

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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 $25,000 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). 

Updated 2014 by Sarah Somers

7.2 Rule 23 Class Certification Requirements

Updated 2014 by Sarah Somers

Rules 23(a) and (b) of the Federal Rules of Civil Procedure govern the requirements for class certification. Rule 23(a) sets forth four threshold requirements for class certification, each of which must be met: (1) the class is so numerous that joinder of class members is impracticable (numerosity); (2) there are questions of law or fact common to the class (commonality); (3) the claims or defenses of the class representatives are typical of those of the class (typicality); and (4) the class representatives will fairly and adequately protect the interests of the class (adequacy).

To certify a class, a court must also find that one of the following requirements, set forth in Rule 23(b), are met: (1) that prosecution of separate actions risks either inconsistent adjudications which would establish incompatible standards of conduct for the defendant or would as a practical matter be dispositive of the interests of others; (2) that defendants have acted or refused to act on grounds generally applicable to the class; or (3) that there are common questions of law or fact that predominate over any individual class member’s questions and that a class action is superior to other methods of adjudication.

Before filing a case as a class action, counsel should analyze carefully if and how the case meets the Rule 23(a) and (b) requirements. The complaint should plead specifically each of the Rule 23 requirements rather than merely parrot the language of Rule 23. Indeed, many local rules require that class action allegations contain specific information regarding the class, such as an estimate of the number of persons in the class./1/ In addition to Rule 23(a) and (b), as explained below, courts have added implicit requirements for class certification. The courts require (1) that a definable class exists, (2) the named representatives are members of that class, and (3) the claim of the class is live, rather than moot. 

The Supreme Court has recently made it clear that plaintiffs must not merely plead the existence of the Rule 23 requirements, but prove them./2/ As a result, district courts must perform a "rigorous" analysis to determine whether the Rule 23(a) prerequisites are satisfied./3/ In Wal-Mart Stores, the Court cast aside the frequently cited proposition that courts are not to consider the merits of the plaintiff’s underlying claim in the analysis,/4/ and observed that the rigorous analysis required frequently will evaluate the merits of the claims presented./5/ Thus, in Wal-Mart Stores, the Court considered the merits of the plaintiffs' Title VII claims because of the overlap of commonality and allegations of a pattern and practice of discrimination./6/ Subsequently, however, in Amgen, Inc. v. Connecticut Retirement Plans and Trust Funds, the Court cautioned that “free-ranging merits inquiries” are not appropriate under Rule 23 and that “[m]erits questions may be considered to the extent—but only to the extent—that they are relevant to determining whether the Rule 23 prerequisites for class certification are satisfied.”/7/

The plaintiff has the burden of proving that the requirements of Rule 23 are met./8/ Factual determinations necessary to the certification ruling must be proven by a preponderance of the evidence./9/ The district court’s decision to certify or to deny certification of the class is subject to review based on a "limited" abuse of discretion standard./10/ A court abuses its discretion if its certification order is premised on legal error./11/ Courts are less deferential to the denial of certifications than they are to the granting of them./12/

7.2.A. Rule 23(a) Requirements

The four preliminary requirements for class certificationnumerosity, commonality, typicality and adequacy of representationmust all be met.

7.2.A.1. Numerosity

The numerosity requirement of Rule 23 does not focus exclusively on the number of members of the putative class, but, instead, on the impracticality of individual joinder./13/ The courts apply no strict numerical test for determining impracticality of joinder, although, as a general benchmark, classes of less than 20 are insufficiently numerous and classes of 40 or more satisfy the numerosity requirement./14/ Rather than relying only on numbers, courts must examine the specific facts of each case./15/

Although a large number of putative class members may suffice to prove numerosity, other factors are considered in determining whether joinder is impracticable./16/ These factors include the ease of identifying and finding individual class members, geographical separation, fluid composition of class population, size of individual claims, individual ability and motivation to bring separate actions, and the nature of the claims raised and relief sought.

In some cases, class size may be proven by appending to the motion for class certification public documents, census data, or responses to Freedom of Information Act requests. In other cases, affidavits can establish the number of class members. If plaintiffs lack information regarding the size of the class, consideration should be given to filing a discovery request at the same time or soon after the filing of the complaint. If the exact number of class members cannot be proven, the court can use common sense and draw inferences about the class size,/17/ but will not resort to speculation./18/ If the size and impracticality of joinder appear to be a problem in a given case, adjusting the class definition may resolve the issue by, for example, eliminating subclasses (each subclass must independently meet the numerosity requirements) or including persons who will be affected in the future./19/

7.2.A.2. Commonality

Plaintiffs’ grievances generally must share a common question of law or fact./20/ Rule 23 does not require that all questions of law or all questions of fact be common to all class members./21/ In fact, only one question of law or fact must be common to the proposed class./22/ Some factual differences among class members do not defeat commonality./23/ Class actions that seek class-wide injunctive or declaratory relief "by their very nature present common questions of law and fact."/24/  

However, allegations that the common question of law or fact is tied to systemic violations of law have recently drawn closer scrutiny./25/ In Lightfoot v. District of Columbia, for example, the plaintiff class alleged that the government and its contractor terminated the benefits of disabled city workers without providing them a pre-deprivation opportunity to challenge the termination. The court decertified the class following receipt of voluminous summary judgment filings when it concluded the procedural due process violations were the result of different practices which did not uniformly pervade the class as a whole. The court held that plaintiffs were required to identify more specifically a particular policy or custom that both violates due process and is common to the class./26/

The Supreme Court addressed a similar commonality issue in the Title VII context in Wal-Mart Stores v. Dukes./27/  In Wal-Mart Stores, as framed by the majority, the plaintiffs contended that local managers wielded substantial discretion over pay and promotion that had a disparate impact on women because this discretion was exercised within a corporate culture of discrimination of which Wal-Mart was aware but did nothing to stop.  This common discriminatory practice adversely affected all female employees. The Court took issue with defining commonality at a high level of generality:

Quite obviously, the mere claim by employees of the same company that they have suffered a Title VII injury, or even a disparate-impact Title VII injury, gives no cause to believe that all their claims can productively be litigated at  once. Their claims must depend upon a common contention—for example, the assertion of discriminatory bias on the part of the same supervisor. That common contention, moreover, must be of such a nature that it is capable of classwide resolution—which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke./28/

The Court found that the plaintiffs had established the existence of a corporate policy: delegating to local managers decisionmaking authority over pay and promotions.  But, it essentially concluded that such delegation was at odds with commonality.  What was required was a showing that local managers exercised this discretion in a common way.  National and regional disparities in pay and promotion between men and women fell short of that because they failed to show the store-by-store differences.  In short, the plaintiffs failed to demonstrate commonality because they could point to no specific employment practice that directly affected all women at Wal-Mart./29/ As anticipated, Wal-Mart Stores has set a higher bar for establishing commonality./30/

Commonality may be demonstrated by expert opinion and statistical evidence.  However, Wal-Mart Stores may have made doing so more difficult. The Court demanded "significant proof" of a policy of discrimination and was quite critical of the plaintiff's expert who attempted to supply such proof, while expressing a view that such experts must meet the requirements of Daubert v. Merrell Dow./31/ Affidavits from class members containing anecdotal evidence of harm may also be used to support commonality, but there, too, Wal-Mart set a high bar: the Court found insufficient 120 affidavits which represented a very small percentage of class members and only a portion of the nation./32/ If the proposed class definition fails to establish commonality, the court may redefine or limit the class,/33/ or create subclasses./34/

7.2.A.3. Typicality

While commonality and typicality "tend to merge,"/35/ the commonality requirement focuses on the common thread among all class members, and the typicality requirement focuses on the named plaintiff. In the leading case in this area, General Telephone Company of the Southwest v. Falcon, the Supreme Court held that the class representative had to “possess the same interest and suffer the same injury as the class members.”/36/ The typicality requirement centers on “whether the class representative’s claims have the same essential characteristics as those of the putative class. If the claims arise from a similar course of conduct and share the same legal theory, factual differences will not defeat typicality.”/37/

Put another way, typicality can be determined by whether there is a sufficient nexus between the claims of the named representatives and those of the class./38/ As with commonality, factual differences do not defeat typicality if the course of conduct and the claims are based on the same legal theory./39/

However, typicality is not present when a class representative's claim may be challenged by a unique defense, which may preoccupy the putative class representative and potentially place her interests ahead of those of the class./40/ In addition, typicality generally requires at least one named plaintiff to have claims against each defendant./41/ There are two exceptions to this principle: when the defendants conspired to harm the class representative and when the defendants are "juridically linked" in the sense that a class action is preferred over multiple actions./42/

7.2.A.4. Adequacy of Representation—Class Representatives and Counsel

Rule 23 (a)(4) requires a class representative to represent fairly and adequately the interests of absent class members. As with other aspects of Rule 23, due process governs the determination of adequacy of representation./43/ By assuring adequacy of representation, Rule 23 permits class judgments to bind absent class members./44/ The requirement of adequate representation applies to both the plaintiffs and counsel. The 2003 Amendments, which added subsection (g) to Rule 23, have changed somewhat the inquiry into adequate representation of counsel.

First, the court asks whether the named plaintiffs will serve as adequate class representatives. By separating the inquiry into adequacy of representation from the issues of commonality and typicality, the rule requires a critical assessment of issues on which the named plaintiffs and any part of the class might disagree./45/ Class certification is improper when the interests of the representative party and the class conflict, although they need not be identical. In a leading Supreme Court case in this area, a class was decertified upon a finding that the claims of the named representatives were not aligned with those of the other class members. In that case, putative class members were all exposed to asbestos, but many members suffered injuries completely different than those suffered by other class members./46/ Defendants often attempt to defeat class certification by making allegations of antagonistic interests between the named representatives and the remainder of the class.

Conflicts can usually be averted by counsel vigilantly assessing all interests involved on a regular basis, informing the court of any potential conflicts when they arise, and asking the court to certify subclasses and appoint independent counsel to represent the varying interests in the conflict./47/ In addition, a judge may order notice to all class members informing them of the right to intervene to oppose the named plaintiff’s position./48/ Or, the court may define the class in a more limited way to avoid conflicts./49/

In addition to showing a lack of conflict with class members, the named plaintiff must also evidence a willingness to prosecute the class claims actively. Thus, in a case in which the named plaintiff failed to file for class certification for two and a half years, the court found that she failed to protect the interests of the proposed class./50/ Adequate representation by the named plaintiff generally should not, however, include an assessment of plaintiff’s financial resources, unless lack of financial resources is relevant to the named plaintiff’s willingness or ability to fund the litigation or represent the class./51/

The 2003 amendments to Rule 23 added subsection (g), which requires the court to appoint class counsel and now explicitly mandates that counsel fairly and adequately represent the class. Under Rule 23(g), certification of the class precedes appointment of adequate counsel./52/ Rule 23(g)(1)(c) lists the factors that the court must consider in appointing class counsel. They include pre-filing investigation, experience, knowledge of law, and resources that counsel will commit to representing the class./53/

When evaluating adequate representation of counsel, zeal and competency of counsel are important factors. Zeal and competency of counsel for the class are initially determined on the basis of the experience of the lawyer or the legal organization for whom the lawyer works and the quality of initial pleadings./54/ Indeed, the court examines the conduct of counsel in the case to date and in other class actions to determine if the representation is adequate./55/ For example, failing to move promptly for class certification could be viewed as evidence of lack of adequate class representation./56/

Having more than one counsel in class actions is advisable as a rule. If one has not handled a class action, then co-counseling with experienced counsel is necessary. Although an initial determination of counsel’s adequacy to represent the class aggressively is necessary to certify the class, the court has flexibility to decertify the class later based on evidence of inadequate representation in discovery./57/

7.2.B. Implicit Requirements

The courts have added some “implicit” requirements for the putative class to meet in order to obtain class certification: (1) a definable class exists, (2) the named representatives have standing, and (3) the claim of the class is live, not moot.

7.2.B.1. Existence of a Definable Class

In order to obtain certification, a class must be sufficiently definable./58/ The court must determine that defining the class is both possible and feasible. This means that a court must be able to identify all members of the class by using objective criteria./59/ If a class is defined in terms of vague or subjective criteria, such as the members’ states of mind, the court has no objective means with which to identify the members of the class and therefore will not certify the class./60/ Even if the class is defined in terms of objective criteria, those criteria may be too difficult for the court to apply feasibly and the court may refuse to certify the class./61/

If a class is so broad that it includes members who would not have standing to bring an action individually, the court will not certify the class. For example, in an action by Latino inmates against a prison for not providing Spanish-speaking staff, the court would not certify a class comprised of all of the Latino inmates. Some of those Latino inmates spoke English and would not have suffered any injury; thus, they did not have standing to sue./62/

Although members of a class must be easily identifiable for the court, a class may be certified even though the court cannot identify every potential member of the class at the moment of certification. Thus, a class may obtain certification even if it is of such a nature that it will inevitably need to add or drop members during the course of the action./63/

Upon finding that a class is not sufficiently definable, the court may limit or redefine the class using its authority under Rule 23(c)(4),/64/ or it can deny class certification and allow the named members to proceed individually./65/ A precisely defined class is necessary in order to analyze whether that class meets the other requirements for certification under Rule 23. Further, a court must have a precise class definition in order to be able to determine which individuals are entitled to notice or relief as well as which individuals will be bound by a judgment.

7.2.B.2. Class Representatives Must Be Part of the Defined Class

In order to obtain certification, the named representatives must be class members. That is, each named representative must have proper standing/66/ and must have the same interest and injury as other members of the class. For example, plaintiffs in an employment discrimination suit would need to be qualified for the job positions at issue in order to act as named representatives of the people against whom an employer has allegedly discriminated./67/

7.2.B.3. A Live Claim

In order for the class to obtain certification, courts require a claim to be live, not moot. If it is not a live claim, the court will dismiss the suit unless a new class representative with a live claim steps forward. However, under certain circumstances, an individual with a moot claim may still serve as a class representative. For example, if a class representative’s claim becomes moot after a class is certified, the entire class action does not become moot as a result./68/ If the court denies class certification and the named representative’s claim later becomes moot, the class representative may still appeal the denial of certification./69/

An individual whose claim is moot may also serve as a class representative if the individual’s claim is “capable of repetition yet evading review.” In such cases an individual with a moot claim may serve as a class representative even if the claim became moot before class certification./70/

7.2.C. Rule 23(b) Requirements

In addition to meeting all four Rule 23(a) requirements, a class action must meet one of the three requirements of Rule 23(b).

7.2.C.1. Rule 23(b)(1) Classes

A Rule 23(b)(1)(A) action is intended to protect the defendants from inconsistent adjudications imposing incompatible obligations that might result from independent actions brought by individual plaintiffs. The Advisory Committee explained:  "One person may have rights against, or be under duties toward, numerous persons constituting a class and be so positioned that conflicting or varying adjudications in lawsuits with individual members of the class might establish incompatible standards to govern his conduct. The class action device can be used effectively to obviate the actual or virtual dilemma which would thus confront the party opposing the class."/71/ It offered an example:

Separate actions by individuals against a municipality to declare a bond issue invalid or condition or limit it, to prevent or limit the making of a particular appropriation or to compel or invalidate an assessment, might create a risk of inconsistent or varying determinations. In the same way, individual litigations of the rights and duties of riparian owners, or of landowners’ rights and duties respecting a claimed nuisance, could create a possibility of incompatible adjudications. Actions by or against a class provide a remedy and fair means of achieving unitary adjudication./72/

Generally, the prospect of inconsistent injunctive relief satisfies this rule while the possibility of varying monetary awards does not./73/

By contrast, a Rule 23(b)(1)(B) action is designed to protect absent class members from litigation that could impair “their ability to protect their interests.” The Advisory Committee explained that:

In various situations an adjudication as to one or more members of the class will necessarily or probably have an adverse practical effect on the interests of other members who should therefore be represented in the lawsuit. This is plainly the case when claims are made by numerous persons against a fund insufficient to satisfy all claims. A class action by or against representative members to settle the validity of the claims as a whole, or in groups, followed by separate proof of the amount of each valid claim and proportionate distribution of the fund, meets the problem./74/

The Supreme Court’s most recent word on Rule 23(b)(1)(B) class actions in the limited fund context is Ortiz v. Fibreboard Corporation./75/ The Court held that certification under this provision requires that 1) the fund is inadequate to pay all claims, 2) all the fund is to be devoted to paying the claims and 3) the class members are treated equitably among themselves./76/ These requirements are difficult to satisfy; an excellent recent example is Katrina Canal Breaches Litigation v. Board of Commissioners, in which the Fifth Circuit reversed the certification of a limited fund class for settlement purposes in a Katrina-related case, holding that the settlement was not fair or reasonable and did not equitably distribute funds among class members./77/

7.2.C.2. Rule 23(b)(2) Classes

Class certification under Rule 23(b)(2) is far more common than (b)(1) classes and the traditional class action tool for poverty lawyers. Under Rule 23(b)(2), the class must show that the defendant acted in a way “generally applicable” to class members, making classwide declaratory and injunctive relief appropriate. In Wal-Mart Stores, the Court held that Rule 23(b)(2) is only satisfied when 

a single injunction or declaratory judgment would provide relief to each member of the class. It does not authorize class certification when each individual class member would be entitled to a different injunction or declaratory judgment against the defendant./78/

Unlike with the commonality requirement of Rule 23(a), factual differences between the named plaintiffs following the classwide injunctive relief may sometimes defeat certification./79/ While manageability is not explicitly required in a Rule 23(b)(2) class, courts sometimes consider it nonetheless./80/ Certification is unlikely if the putative class seeks particularized relief for each class member.

In requesting Rule 23(b)(2) certification for injunctive relief, the named plaintiffs must have standing for each type of relief requested./81/ Thus, when a named plaintiff does not have standing to seek injunctive relief, Rule 23(b)(2) class certification is denied./82/ Rule 23(b)(2) class members require no notice (although the court may direct notice in unusual cases) and have no opt-out rights./83/

In cases where compensatory damages as well as injunctive or declaratory relief are sought, courts have struggled with determining whether (b)(2) certification is appropriate. This is particularly significant in employment discrimination cases. Since the 1991 amendments to the Civil Rights Act, Title VII plaintiffs have been permitted to recover compensatory damages./84/ These damages include relief for a wide range of losses including future pecuniary losses, emotional pain, suffering, nonpecuniary damages (Section 1981a(b)(3)); and punitive damages (Section 1981a(b)(1)(2)). In Wal-Mart Stores v. Dukes, the Court resolved that issue in large part by holding that a Rule 23(b)(2) class is not appropriate when the class seeks individualized monetary damages for class members./85/ Further, the Court rejected the notion that Rule 23(b)(2) classes are appropriate so long as monetary relief does not "predominate" over injunctive or declaratory relief./86/

The Court noted, with apparent approval, the holding in Allison v. Citgo Petroleum Corporation/87/ that Rule 23(b)(2) certification was appropriate only if compensatory relief was merely "incidental" to the equitable relief sought in Title VII cases./88/ Such would be the case if "damages . . . flow directly from liability to the class as a whole on the claims forming the basis of the injunctive or declaratory relief."/89/ This was appropriate because such "incidental damage should not require additional hearings to resolve the disparate merits of each individual's case; it should neither introduce new substantial legal or factual issues, nor entail complex individualized determinations."/90/ The Court in Wal-Mart said that it did not have to decide whether the award of such incidental damages could comport with Due Process because the plaintiffs did not and could not argue that the monetary relief sought satisfied the "incidental" test./91/ In the Title VII context, the Court held that principles of Due Process require individualized hearings on eligibility for backpay./92/

 Increasingly, courts are finding an implicit "cohesiveness" requirement in Rule 23(b)(2)./93/ The Lightfoot v. District of Columbia case fell victim to such a requirement, found nowhere in the Rule.  There, the court found that differences in the amounts of time class members had between notice and termination, all alleged to be constitutionally insufficient, yielded a conclusion that the class was not sufficiently cohesive to warrant class certification./94/ The irony of such a cohesiveness requirement in Rule 23(b)(2) cases is seemingly arbitrary deviations from a common unwritten custom and practice can preclude class certification.

7.2.C.3. Rule 23(b)(3) Classes

Rule 23(b)(3) permits certification under subdivision (b)(3) when the primary relief sought is damages. In such a case, Rule 23(b)(3) requires that the common questions of law and fact predominate over any individual questions and that a class action be superior to other methods for fair and efficient resolution of the conflict./95/ The district court has broad discretion in determining whether common questions predominate and whether a class action is manageable, using the factors set forth in Fed. R. Civ. P. 23(b)(3)(A-D).

Rule 23(b)(3) class actions are expensive and time-consuming, requiring notice to all class members;/96/ opportunity for opt-out; more expensive and extensive discovery; and individual representation post-judgment. As such, counsel should carefully consider the resources required for litigation before undertaking representation of a Rule 23(b)(3) class. Whenever possible, certification should be sought under subdivision (b)(1) or (b)(2).

__________________________________________________________________________________


1. E.g., L.R. 23.1 (A)(2) (N.D. Fla.) and L.R. 23.1 (b)(2)(A) (E.D. Pa.). Local rules may also have other specific and/or additional requirements regarding class actions.

2. Wal-Mart Stores, Incorporated v. Dukes, 131 S. Ct. 2541, 2551 (2011).

3. Id. (citing  General Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 161 (1982)).

4. Wal-Mart Stores, 131 S. Ct. at 2552 n.6 (citing Eisen v. Carlisle and Jacquelin, 417 U.S. 156, 177-78 (1974)).

5. Wal-Mart Stores, 131 S. Ct. at 2551-52. The 2003 rule changes allow for a slightly later determination of class certification and eliminate the possibility of “conditional” class certification; some courts have understood such rule changes as compelling a more thorough evaluation at the class certification stage, including a limited review of the merits. For cases predating Wal-Mart Stores, see In re Hydrogen Peroxide Antitrust Litigation, 552 F.3d 305, 307, 317 (3d Cir. 2008); In re Initial Public Offering Securities Litigation, 471 F.3d 24 (2d Cir. 2006), clarified on reh'g, 483 F.3d 70 (2d Cir. 2007); Fener v. Operating Engineers Construction Industry and Miscellaneous Pension Fund (Local 66), 579 F.3d 401 (5th Cir. 2009) (class certification denied because plaintiffs failed to prove at certification stage that alleged action, in fact, caused stock prices to fall).

6. Wal-Mart Stores, 131 S. Ct. at 2552.

7. 133 S. Ct. 1184, 1194-95 (2013). See also Messner v. Northshore University HealthSystem, 669 F.3d 802, 811 (7th Cir. 2012) (cautioning that district courts may not “turn the class certification proceedings into a dress rehearsal for the trial on the merits.”).

8. Stirman v. Exxon Corp., 280 F.3d 554, 562 (5th Cir. 2002).

9. Hydrogen Peroxide, 552 F.5d at 320.

10Paton v. N. M. Highlands Univ., 275 F.3d 1274, 1277 (10th Cir. 2002); See also Amchem Prods. v. Windsor, 521 U.S. 591, 630 (1997) (Breyer, J., dissenting).

11. Hawkins v. Comparet-Cassani, 251 F.3d 1230, 1237 (9th Cir. 2001).

12. Millowitz v. Citigroup Global Markets, Inc. (In re Salomon Analyst Metromedia Litigation), 544 F.3d 474, 480 (2d Cir. 2008). 

13. “Numerosity” is the term generally used to identify this requirement. However, classes of various numbers have been certified. This requirement might be more appropriately termed “impracticality.” See, e.g., Anderson v. Dep’t of Pub. Welfare, 1 F. Supp. 2d 456, 461 (E.D. Pa. 1998); 1 William Rubenstein, Alba Conte & Herbert B. Newberg, Newberg on Class Actions § 3:3 (4th ed. and Supp. 2010). 

14. See Gen. Tel. Co. of the NW. v. EEOC, 446 U.S. 318, 330 (1980) (suggesting 15 is too few); Hayes v. Wal-Mart Stores, Incorporated, 725 F.3d 349, 357 (3d Cir. 2013) (presuming numerosity at 40); Consol. Rail Corp. v. Town of Hyde Park, 47 F.3d 473, 483 (2d Cir. 1995) (same). There are, of course, exceptions. Clark v. State Farm Mut. Auto. Ins. Co., 245 F.R.D. 478 (D. Colo. 2007) (rejecting class of 115); Peoples v. Sebring Capital Corp., 209 F.R.D. 428 (N.D. Ill. 2002) (certifying a class of eleven individuals); Grant v. Sullivan, 131 F.R.D. 436 (M.D. Pa. 1990) (noting that in some cases, particularly where declaratory and injunctive relief is sought classes as small as fourteen may be certified); Hernandez v. Alexander, 152 F.R.D. 192 (D. Nev. 1993) (indicating that a class of fifty-two might meet numerosity requirements but declined to certify because of failure to show “impracticability” of individual joinder).

15. Gen. Tel. Co. of the NW. v. EEOC, 446 U.S. 318, 330 (1980); Rannis v. Recchia, 380 F. App'x 646, 651 (9th Cir. 2010); Stewart v. Abraham, 275 F.3d 220, 226-27 (3d Cir. 2001); In re Am. Med. Sys., Inc., 75 F.3d 1069, 1079 (6th Cir. 1996); Robidoux v. Celani, 987 F.2d 931, 935-36 (2d Cir. 1993); 5 James Wm. Moore, et al., Moore's Federal Practice at § 23.33[1][a];1 Rubenstein, Conte & Newberg, supra note 13, § 3:6.

16. 7AA Charles A. Wright et al., Federal Practice and Procedure § 1762, at 176 (3d ed. 2005 & Supp. 2010); 5 Moore et al., supra note 15, § 23.05[3] at 23-156. See Robidoux, 987 F.2d at 935-36.

17. See Evans v. U.S. Pipe & Foundry, 696 F.2d 925, 930 (11th Cir. 1983); Sullivan v. Kelly Servs., Inc., 268   F.R.D. 356, 362 (N.D. Cal. 2010); Neese v. Johanns, 2006 U.S. Dist. LEXIS 25344, at *15, 2006 WL 1169800, at *5 (W.D. Va. May 2, 2006); Talbott v. GC Servs., Ltd. Pshp., 191 F.R.D. 99 (W.D. Va. 2000); McGlothlin v. Connors, 142 F.R.D. 626, 632 (W.D. Va. 1992). 

18. Vega v. T-Mobile USA, Inc., 564 F.3d 1256, 1267-68 (11th Cir. 2009); Golden v. City of Columbus, 404 F.3d 950, 966 (6th Cir. 2005) .

19Courts have struggled to produce a rule governing the inclusion of future adversely affected persons within a class. Although those already injured by an unlawful practice can be identified, knowing how many will be injured if the practice is continued is inherently impossible. Accordingly, some courts routinely include future victims of the challenged conduct within the class definition. See e.g., Pederson v. La. State Univ., 213 F.3d 858, 868 n.11 (5th Cir. 2000). Such inclusion of future victims does not render the class definition too vague for certification. Rodriguez v. Hayes, 591 F.3d 1105, 1118 (9th Cir. 2010); Probe v. State Teachers’ Ret. Sys., 780 F.2d 776, 780 (9th Cir. 1986); Williams v. City of Antioch, No. 90, 2010 WL 3632197, at *6, 2010 U.S. Dist. LEXIS 97829, at *21 (N.D. Cal. Sept. 2, 2010).

20 Fed. R. Civ. P. 23(a)(2); Wal-Mart Stores, 131 S. Ct. at 2556; Baby Neal v. Casey, 43 F.3d 48, 56 (3d Cir. 1994). See also Marisol A. v. Giuliani, 126 F.3d 372, 376 (2d Cir. 1997).

21. See, e.g., Wal-Mart Stores, 131 S. Ct. at 2556; Parra v. Bashas', Inc., 536 F.3d 975 (9th Cir. 2008), cert. denied, 129 S. Ct. 1050 (2009); Thomas v. Albright, 139 F.3d 227, 236 (D.C. Cir. 1998).

22. Wal-Mart Stores, 131 S. Ct. at 2556.  See Jamie S. v. Milwaukee Public Schools, 668 F.3d 481, 497 (7th Cir. 2012); D.G. ex rel. Stricklin v. DeVaughn, 594 F.3d 1188, 1198 (10th Cir. 2010); In Re Am. Med. Sys. Inc., 75 F.3d at 1080; Baby Neal, 43 F.3d at 56; Lightfoot v. District of Columbia, 246 F.R.D. 326, 337 (D.D.C. 2007).

23. D.G., 594 F.3d at 1195; Lightfoot, 246 F.R.D. at 337; Bynum v. District of Columbia, 214 F.R.D. 27, 32 (D.D.C. 2003). 

24. Disability Rights Council of Greater Washington v. WMATA, 239 F.R.D. 9, 26 (D.D.C. 2007) (quoting 7A Wright, et al., supra note 16, § 1763.).

25. D.G., 594 F.3d at 1195; Lightfoot v. District of Columbia, No. 01-01484 (D.D.C. Jan. 10, 2011). 

26Lightfoot, No. 01-01484.

27Wal-Mart Stores v. Dukes, 131 S. Ct. 2541 (2011).

28. Id. at 2551.

29. Id. at 2551-57 .

30. See, e.g., DL v. District of Columbia, 713 F.3d 120, 126 (D.D.C. 2013) (vacating certification of class of Individuals with Disabilities Education Act (IDEA)-eligible children for failure to satisfy commonality, citing Wal-Mart Stores’ change of the landscape, collecting cases); M.D. ex re. Stukenberg v. Perry, 675 F.3d 832, 840-41 (5th Cir. 2012) (vacating class certification based on failure to establish commonality, citing “heightened” standard established by Wal-Mart Stores); Jamie S., 668 F.3d at 498 (vacating certification of class of IDEA-eligible children and order approving subsequent settlement based on lack of commonality).

31. Id. at 2555.

32Id. at 2556.

33. Fed. R. Civ. P. 23(c)(4); See, e.g., Rodriguez v. Hayes, 591 F.3d 1105, 1123 (9th Cir. 2010); Gunnells v. Healthplan Servs., Inc., 348 F.3d 417, 439 (4th Cir. 2003); Robinson v. Metro-North Commuter R.R. Co., 267 F.3d 147, 167 (2d Cir. 2001), cert. denied, 535 U.S. 951 (2002).

34.  Fed. R. Civ. P. 23(c)(5). See e.g., In re Ins. Brokerage Antitrust Litig., 579 F.3d 241, 271 (3d Cir. 2009); McDonough v. Toys "R" Us, Inc., 638 F. Supp. 2d 461, 473–74 (E.D. Pa. 2009).

35. General Tel. Co. of Sw. v. Falcon, 457 U.S. 147, at 157, n.13 (1982).

36. Id. at 156. 

37. Stirman v. Exxon Corp., 280 F.3d 554, 562 (5th Cir. 2002); Stewart v. Abraham, 275 F.3d 220, 227-28 (3d Cir. 2001) (certifying class challenging city’s re-arrest policy). See also Piazza v. Ebsco Industries Inc., 273 F.3d 1341, 1351 (11th Cir. 2001) (strong similarity of legal theories satisfies typicality despite substantial factual differences)

38. Prado-Steiman v. Bush, 221 F.3d 1266, 1278-79 (11th Cir. 2000). 

39. D.G. ex rel. Stricklin, 594 F.3d at 1199; Beck v. Maximus, Inc., 457 F.3d 291, 296 (3d Cir. 2004); Bynum, 214 F.R.D. at 34.

40. See Brown v. Kelly, 609 F.3d 467, 480 (2d Cir. 2010).

41. See, e.g., In re Franklin Mutual Funds Fee Litigation, 388 F. Supp. 2d 451, 461 (D.N.J. 2005). 

42. Payton v. County of Kane, 308 F.3d 673, 679 (7th Cir. 2002); La Mar v. H & B Novelty and Loan Co., 489 F.2d 461 (9th Cir. 1973).

43. See generally Rubenstein, Conte & Newberg, supra note 13, § 1.03 (notice and adequacy of representation are touchstones of due process in class actions). See also In re Am. Med. Sys. Inc., 75 F.3d at 1083 and Broussard v. Meineke Disc. Muffler Shops Inc., 155 F.3d 331, 338 (4th Cir. 1998) (explaining the class action premise that, because “litigation by representative parties adjudicates basic due process rights of all class members, named plaintiffs must possess undivided loyalty to absent class members”).

44. Hansberry v. Lee, 311 U.S. 32 (1940). For a good explanation of this case, see Horton v. Goose Creek Indep. Sch. Dist., 690 F.2d 470, 486-87 (5th Cir. 1982). See also Richards v. Jefferson Co., 517 U.S. 793, 800-01 (1996).

45. But see General Tel. Co. of Sw. v. Falcon, 457 U.S. 147 at 157 n.13 (1982) (requirements of commonality and typicality tend to merge and so does adequacy-of-representation requirement, although adequacy of representation raises concerns about competency of class counsel and conflicts of interest).

46. Anchem Prod. Inc. v. Windsor, 521 U.S. 591, 626 (1997). See also Schlaud v. Snyder , 717 F.3d 451, 458 (6th Cir. 2013) (upholding denial of certification of home childcare providers challenging union because proposed class included members who voted for union); Berger v. Compaq Computer Corp., 257 F.3d 475, 480 (5th Cir. 2001) (differences between named plaintiffs and class members render named plaintiffs inadequate only when those differences create conflicts.)

47. See, e.g., Diaz v. Romer, 961 F.2d 1508 (10th Cir. 1992) and cases cited therein (appropriate to certify subclasses due to conflict between those class members who were HIV-positive and those who were HIV-negative). See also Marisol A. v. Giuliani, 126 F.3d 372, at 378-79 (2d Cir. 1997) (affirming class certification but suggesting to district court on remand ways to subdivide the class).

48. Horton v. Goose Creek Indep. Sch. Dist., 690 F.2d 470, 487 (5th Cir. 1982) (explaining options open to a district court).

49. See, e.g., In re Cmty. Bank of N. Va., 622 F.3d 275, 304 ((3d Cir. 2010) (remanded the case to the lower court to decide whether, in view of the intra-class conflict, a subclass should be created); Fabricant v. Sears Roebuck & Co., 202 F.R.D. 306, 308 (S.D. Fla. 2001) (“So long as the exclusions preserve the objective nature of the class definition, persons may be excluded from the class.”)

50Rattray v. Woodbury County, 614 F.3d 831, 836 (8th Cir. 2010); Monroe v. City of Charlottesville, 579 F.3d 380, 385 (4th Cir. 2009) (apparent disinterest in case); cert. denied, 130 S. Ct. 1740 (2010); Harriston v. Chicago Tribune Co., 992 F.2d 697, 704 (7th Cir. 1993).

51. Horton, 690 F.2d at 485 n.26.

52. Sheinberg v. Sorenson, 606 F.3d 130 (3rd Cir. 2010).

53Id.

54. Marisol A. v. Giuliani, 126 F.3d 372, 378 (2d Cir. 1997) (inquiry into whether named plaintiffs will represent potential class with necessary vigor most often described as turning on questions of “whether plaintiffs’ counsel are qualified, experienced, and generally able to conduct proposed litigation”). See also Berger v. Compaq Computer Corp., 257 F.3d 475, 479 (5th Cir. 2001) (adequacy requirement mandates inquiry into zeal and competence of representatives’ counsel). The adequacy of counsel is generally pled in the motion for class certification and resumes of counsel are attached.

55. See, e.g., Kandel v. Bro. Int'l Corp., 264 F.R.D. 630, 634-35 (C.D. Cal. 2010);  Armstrong v. Chi. Park Dist., 117 F.R.D. 623, 631-34 (N.D. Ill. 1987) (holding inexperience alone may not be sufficient, but examining mistakes in other class actions as well as the one before in denying certification based on mistakes and inexperience). See also Creative Montessori Learning Centers v. Ashford Gear LLC, 662 F.3d 913, 917 (7th Cir. 2011) (vacating order certifying class, holding class counsel was  not adequate due to “lack of integrity” of counsel and court’s lack of conviction that they would represent interests of class); Gomez v. St. Vincent Health, Inc., 649 F.3d 583, 592 (7th Cir. 2011) (finding lower court did not abuse its discretion in finding proposed class counsel inadequate based on lack of diligence and promptness, faulty discovery efforts, and lack of respect for judicial resources).

56. E. Tex. Motor Freight Sys. v. Rodriguez, 431 U.S. 395, 405 (1977); Rattray, 614 F.3d at 836-37. But see In re Arakis Energy Corp. Sec. Litig., No.1:95-civ-3431 (AAR), 1999 WL 1021819, 1999 U.S. Dist. LEXIS 22246 (E.D.N.Y. April 23, 1999) (finding small delay insufficient to deny certification and collecting cases discussing issue).

57E. Tex. Motor Freight Sys., 431 U.S. at 405.

58John v. National Sec. Fire & Cas. Co., 501 F.3d 443, 445 (5th Cir. 2007).

59. See, e.g., Garrish v. UAW, 149 F. Supp. 2d 326 (E.D. Mich. 2001) (finding that union membership was an objective criterion sufficient to define a class); Daniels v. City of N. Y., 198 F.R.D. 409, 414 (S.D.N.Y. 2001) (finding that a proposed class of persons stopped and frisked by a street crimes police unit in the absence of reasonable suspicion was sufficiently definable for certification); Pigford v. Glickman, 182 F.R.D. 341 (D.D.C. 1998) (finding a sufficiently definable class when farmers suing the U.S. Department of Agriculture defined a class as those African American farmers who farmed between certain dates, applied to participate in department programs between those dates, and filed with the department a written complaint alleging a discriminatory response to their applications).

60. Burley v. City of New York, 2005 WL 668789, at *8–9, 2005 U.S. Dist. LEXIS 4439, at *25-28 (S.D.N.Y. Mar. 23, 2005) (class that refers to “arrestees who were subject to excessive handcuffing” not precise enough to be certified); Oldroyd v. Kugler, 352 F. Supp. 27, 31 (D.N.J. 1972) (class not certified where putative class members had a “fear of prosecution” for flag desecration because class defined in terms of subjective criterion of state-of-mind). See also Carrera v. Bayer Corporation , 727 F.3d 300, 304 (3d Cir. 2013) (class not certifiable if it is impossible to identify members without extensive individual fact finding); DeBremaecker v. Short, 433 F.2d 733 (5th Cir. 1970) (class definition “active in peace movement” too vague for objective criteria to identify class).

61. Mueller v. CBS Inc., 200 F.R.D. 227 (W.D. Pa. 2001) (declining to certify class where numerous individual determinations were necessary to identify class members). See generally UAW v. GMC, 235 F.R.D. 383 (E.D. Mich. March 31, 2006), aff'd, 497 F.3d 615 (6th Cir. 2007); see also Rahman v. Chertoff, 530 F.3d 622, 627 (7th Cir. 2008) (resolving definition problem by finding typicality was not satisfied).

62. Pagan v. Dubois, 884 F. Supp. 25 (D. Mass. 1995).

63. See Santillan v. Ashcroft, No. C 04-2686 MHP, 2004 U.S. Dist. LEXIS 20824 (N.D. Cal. Oct. 12, 2004); Probe v. State Teachers’  Ret. Sys., 780 F.2d 776, 780 (9th Cir. 1986). See also 7A Wright et al., supra note 16, § 1760, at 139.

64. In re Monumental Life Ins. Co., 365 F.3d 408, 414 (5th Cir. 2004); Clay v. Am. Tobacco Co., 188 F.R.D. 483, 490 (S.D. Ill. 1999).

65. Perez v. Metabolife International., Inc., 218 F.R.D. 262, 269 (S.D. Fla. 2003); White v. Williams, 208 F.R.D. 123, 129-30 (D.N.J. 2002)

66. Johnson v. GEICO Cas. Co., 673 F. Supp. 2d 244 (D. Del. 2009); In re Franklin Mut. Funds Fee Litig., 388 F. Supp.2d 451 (D.N.J. 2005).

67. E. Tex. Motor Freight Sys. v. Rodriguez, 431 U.S. 395, 403-04 (1977). See also Kelley v. Galveston Autoplex, 196 F.R.D. 471, 474 (S.D. Tex. 2000); McGlothlin v. Connors, 142 F.R.D. 626, 632 (W.D. Va. 1992).

68. Sosna v. Iowa, 419 U.S. 393 (1975); see Roman v. Korson, 307 F. Supp. 2d 908, 914-15 (W.D. Mich. 2004).

69. U.S. Parole Comm’n v. Geraghty, 445 U.S. 388 (1980). See Chapter 3.3.C of this MANUAL for further guidance on this point.

70. Gerstein v. Pugh, 420 U.S. 103 (1975); see Portis v. City of Chicago, 347 F.Supp. 2d 573 (N.D. Ill. 2004).

71Fed. R. Civ. P. 23(b)(1)(A) advisory committee's notes, 1966 amends.

72 Id.

73. See, e.g., Zinser v. Accufix Research Inst., Inc., 253 F.3d 1180 (9th Cir.), amended by 273 F.3d 1266 (9th Cir. 2001). See also 7AA Wright et al., supra note 16, § 1773, at 13.

74. Fed. R. Civ. P. 23(b)(1)(B) advisory committee’s notes, 1966 amends.

75. Ortiz v. Fibreboard Corp., 527 U.S. 815 (1999).

76Id. at 838-39.

77. In re Katrina Canal Breaches Litigation, Case No. 09-31156 (5th Cir. Dec. 16, 2010).

78. Wal-Mart Stores, 131 S. Ct. at 2557.  See also DL v. District of Columbia, 713 at 125 (vacating class certification order, finding failure to satisfy Rule 23(b)(2)); M.D. v. Perry, 675 F.3d at 845 (same); Jamie S. at 498 (same).

79. Compare Stewart v. Abraham, 275 F.3d 220, 227-28 (3d Cir. 2001) (affirming certification of (b)(2) class despite factual differences since there was at least one question of fact and law common to each class member) and Jordan v. Commonwealth Fin. Sys., 237 F.R.D. 132 (E.D. Pa. 2006) with Shook v. Bd. of County Commissioners, 543 F.3d 597, 604 (10th Cir. 2008) ("In short, under Rule 23(b)(2), the class members' injuries must be sufficiently similar that they can be addressed in a single injunction that need not differentiate between class members.") and Vallerio v. Vandehey, 554 F.3d 1259, 1268 (10th Cir. 2009) (reversing grant of certification under Rule 23(b)(2) because plaintiff did not meet burden of showing that injuries were sufficiently similar and because suit sought to enjoin wide range of conduct).

80. See Shook v. Bd. of County Comm'rs, 543 F.3d 597, 604 (10th Cir. 2008).

81Sosna v. Iowa, 419 U.S. 393, 403 (1975).

82. See O’Shea v. Littleton, 414 U.S. 488, 494 (1974); Hayes v. Wal-Mart Stores, Inc., 725 F.3d 349, 361 (3d Cir. 2013) (noting that question of whether class representative has standing can overlap with question of whether he fits within class definition).

83. However, the 2003 amendment to Rule 23(c), provides that the court “may” direct appropriate notice to the class.

84. 42 U.S.C.§ 1981a(a)(1).

85. Wal-Mart Stores, 131 U.S. at 2557.

86. Id. at 2559.

87. Allison v. Citgo Petroleum Corp., 151 F.3d 402 (5th Cir. 1998).

88. Wal-Mart Stores, 131 U.S. at 2560. See also Reeb v. Ohio Dep't of Rehab. & Corr., 435 F.3d 639, 646-51 (6th Cir. 2006); Murray v. Auslander, 244 F.3d 807, 812 (11th Cir. 2001); Lemon v. Int'l Union of Operating Eng'rs Local No. 139, 216 F.3d 577, 580-81 (7th Cir. 2000).

89. Allison, 151 F.3d at 415.

90. Wal-Mart Stores, 131 U.S. at 2560.

91. Id.

92. Id.

93. See, e.g., Benjamin by and through Yock v. Department of Public Welfare of Pennsylvania, 701 F.3d 938, 950 (3d Cir. 2012); Romberio v. UnumProvident Corporation, 385 Fed. App'x 423, 432 (6th Cir. 2009); Shook, 543 F.3d at 604; In re St. Jude Med., Inc., 425 F.3d 1116, 1121 (8th Cir. 2005); Lemon v. Int'l Union of Operating Engr's', Local No. 139, 216 F.3d 577, 580 (7th Cir. 2000); In re Rezulin Prods. Liab. Litig., 210 F.R.D. 61, 75 (S.D.N.Y. 2002).

94. Lightfoot, No. 01-01484.

95. See generally 7A Wright et al., supra note 16, § 1777. The relevant considerations for so determining are listed in Rule 23(b)(3)(A)-(D). The Supreme Court has recently held that “Rule 23(b)(3)’s predominance criterion is even more demanding” than the rigorous standard for satisfying the requirements of 23(a). Comcast Corporation v. Behrend, 133 S. Ct. 1426, 1432 (2013).

96. The 2003 amendments significantly change the notice requirements in (b)(3) cases: courts now may refuse to approve settlements unless they contain post-settlement opt-out notice to all class members. See Fed. R. Civ. P. 23(e)(3).

 Updated 2014 by Sarah Somers

7.3 Defining and Managing a Class (part one)

Updated  2014 by Sarah Somers

The process of successfully defining and managing a class action includes consideration of many factors. Counsel must carefully select the named plaintiffs and define the class, keeping in mind the Rule 23 (a) and (b) issues discussed above. Next, counsel must address pre-certification issues and the process of moving for class certification. Finally, the possibility of interlocutory appeals, notice and opt-out procedures and communication with the class are all important issues that will be discussed below.

7.3.A. Selection of Named Plaintiff(s)

The careful selection of class representatives avoids many procedural problems and presents the case in its best light. If the only available client would not be a suitable class representative, do not bring the case as a class action.

When evaluating a potential class representative, be alert for conflicts between the interests of the named plaintiff and the putative class; the possibility of mootness of the named plaintiff’s claim; whether the injuries suffered by the named representative are typical of those in the putative class; and the standing of the named plaintiff to seek each type of relief sought. In addition, counsel must consider the ability of the plaintiff to cooperate with, and withstand successfully anticipated discovery, and determine whether plaintiffs are required to exhaust administrative remedies prior to bringing suit.

Consideration should also be given to the potential media exposure, possible retaliation by defendants, and the plaintiff’s ability to cope with such pressures. As in any other situation, weaknesses in the client’s case, difficulties in their background and countervailing strengths or poignant facts must be identified.

7.3.B. Defining the Class

Rule 23(c)(1)(C) provides that the class may be defined or redefined at any time before final judgment. This may occur either following a motion of either party or by the court./1/ Thus, counsel should reevaluate the initially drafted definition as discovery proceeds and the case takes shape. Counsel should request redefinition if appropriate.

When defining the class, counsel must consider: (1) the time frame, which will determine who may be included; (2) the geographic size of the class; and (3) the common claims and injuries experienced by the class as a whole, all with an eye to the relief requested. The effect on similar ongoing or planned litigation should also be considered.

7.3.B.1. Time Frame

The applicable statute of limitations determines whether to define the class to include individuals harmed before the filing of the case and the cut-off dates to use in determining eligibility for the class. However, the inclusion of class members in a putative class whose individual claims may be subject to affirmative defenses, such as a statute of limitations, does not preclude class certification so long as common issues otherwise predominate./2/

Other factors to be considered in defining the class include: (1) the date and duration of defendant’s challenged action and (2) whether the action is a continuous one. Where the injury is continuous, retroactive and/or prospective relief may be available. In evaluating whether to seek retroactive relief, counsel must determine whether the Eleventh Amendment limits such relief/3/ and whether the difficulty in finding class members makes such relief impracticable. The class definition may also include individuals who may be harmed in the future./4/

7.3.B.2. Geographic Scope

Counsel must consider whether there is ongoing or planned litigation in the same or an overlapping geographical area. If other attorneys are likely to bring the same or very similar case in a different geographic area soon, limiting the geographic size of the class is probably a good idea. While expanding the geographic scope may help in establishing numerosity, complications can arise with commonality, management of the class, and relief. At the same time, nationwide class actions are certainly permissible./5/ They may be helpful in avoiding inconsistent applications of policy.

7.3.B.3. Common Claims and Injuries

To assure standing, the class definition should be tied to the injury suffered by class members and to the relief sought. For example, rather than drafting a class definition as “all residents of X public mental institution,” it is better to define the class more specifically as “all residents of X public mental institution who, since [date] have been or will be placed in isolation or restraints without written standards or appeal rights.” The latter definition more precisely shows that the class members suffered an injury, that the injury is caused by the defendants, and that the relief requested by the class will remedy the harm.

The definition of the injury should be factually specific, as opposed to tied to a legal term. This avoids requiring the court to make an individual legal determination regarding each person’s inclusion in the class./6/ The type of relief requested may have an impact on the class definition. For example, in a case where administrative action is challenged, the class may have to be defined as having exhausted administrative remedies in order to obtain relief/7/ unless plaintiffs can show that exhausting administrative remedies would be futile./8/

Reviewing the type of injury suffered by class members may reveal that (1) different legal theories support relief for some, but not all; (2) different injuries are experienced by various groups within the class; or (3) the interests of some of the class conflict with the interests of other class members. In such situations, subclasses may be appropriate./9/ In the first two scenarios, subclasses would probably help clarify the issues and ensure that the claims of the named representative are typical of the claims of the class. In the third, when conflicts arise, most courts will require that the subclasses be represented by independent counsel. Remember that subclasses must independently meet all of the Rule 23 requirements./10/

7.3.C. Precertification Discovery

After counsel has selected and defined the class and filed suit, the next questions are whether pre-certification discovery will be allowed and what the scope is of that discovery. The two main issues are: (1) whether discovery related to the existence of the class should be permitted before class certification and (2) whether discovery on the merits should be held in abeyance until the motion for class certification is determined.

7.3.C.1. Class Discovery

Earlier editions of the Manual for Complex Litigation suggested that the determination of whether Rule 23’s requirements are met should generally be decided on the pleadings. Modifying that view somewhat, the most recent edition indicates that class certification decisions may turn on matters outside the pleadings./11/ On occasion, the pleadings alone permit a determination of whether the criteria for class certification in Rule 23(a) and (b) are satisfied./12/ For example, if the defendant’s opposition to the certification motion is based solely on issues of law, the court may make the determination without discovery. Otherwise, courts have held that it is error to accept factual allegations in the complaint as true/13/ and, as a result, discovery is often permitted with respect to issues pertaining to class certification requirements./14/

Sometimes, a court will refuse discovery but allow declarations or other evidence to supplement the pleadings in support of or in opposition to the motion for class certification, including expert affidavits or other corroborating evidence gathered outside the formal discovery process./15/ Reasonable inferences and estimates based on such material may be sufficient to demonstrate that certification is warranted./16/ More commonly, however, the court will require an evidentiary hearing and has considerable discretion to determine the scope of such a hearing and what evidence may be admitted at it./17/ Whatever type of evidence is used, the plaintiff bears the burden of making a prima facie showing that the prerequisites of class certification are, or can be, satisfied after discovery./18/

If precertification discovery is granted, it should aim to give an “informed judicial assessment” of the class certification issue even if such facts overlap with the merits of the case./19/ With respect to discovery of defendants, discovery is generally limited to facts relevant to the Rule 23(a) and (b) criteria. Mindful of the requirement that a certification decision should be made "at an early practicable time," courts may limit precertification discovery to that which can be done promptly and with a high probability of relevance. /20/

In an effort both to expedite and to narrow the scope of discovery for class certification, courts commonly employ a number of restrictions. First, geographic and time constraints may be used, limiting discovery to a specific region of the country or for a certain duration./21/ Second, the number of people from whom information is sought may also be restricted. For example, discovery of the proposed class representatives or class members may be limited to a certain number, group, or percentage of individuals in a particular putative class or subclass./22/ If the class defined by the plaintiff is unreasonably broad, a court may also limit discovery relevant to a similar but more practicable class. Third, although depositions are usually acceptable methods for pre-certification discovery, some courts first require a demonstration of good cause for using a deposition. The number and length of requests for production, interrogatories, and depositions are often limited as well./23

Generally the courts are hesitant to allow discovery of absent class members./24/ The courts balance the defendant’s need for information against the privacy interests of uninvolved parties who did not initiate the suit./25/ Initial discovery is confined to what is necessary for determining whether a proper class action exists. In some instances, however, courts allow discovery of absent class members./26/ For example, some courts are willing to subject absent class members to discovery where the proponent shows that (1) the discovery is not designed to take undue advantage of class members or to reduce the size of the class; (2) the discovery is necessary; (3) responding to the discovery requests would not require the assistance of counsel or other technical advice; and (4) the discovery seeks information not already known by the proponent./27/ Other courts allow discovery of absent class members only “where a strong showing is made that the information sought: (1) is not sought for the purpose of harassment or altering membership of the class; (2) is directly relevant to common questions and unavailable from the representative parties; and (3) is necessary at trial for issues common to the class.”/28/

Representative plaintiffs must be capable of fully financing litigation on behalf of their class, but discovery of financial information is strictly limited./29/ As a result, sworn statements or affidavits often suffice to prove financial adequacy./30/

Rule 23(d) authorizes district courts to order defendants to aid in determining the identity of absent class members./31/ If the identification can be done with less difficulty and expense by the defendant, a court normally compels assistance. Otherwise, the plaintiffs bear the costs and efforts of such investigatory work.

7.3.C.2. Bifurcation Of Class and Merits Discovery

The Manual for Complex Litigation suggests that bifurcation of discovery may be useful when the merits discovery is not related to the certification issues./32/ Where discovery is bifurcated, pre-certification discovery proceeds while merits discovery is stayed. If merits discovery is stayed, the discovery plan should make clear when the stay will be lifted. Nonetheless, often no bright line distinguishes class and merits discovery./33/

Consequently, courts must balance the interest in gathering a complete record from which to decide class certification and the risk of potentially burdensome or unnecessary discovery if the class certification motion is denied. If the case would likely continue even if class certification is denied, the downside of discovery is less and the court more likely to be permissive with pre-certification discovery./34/

______________________________________________________________________________________________________

1. See, e.g., Hnot v. Willis Group Holdings, 241 F.R.D. 204, 207-08 (S.D.N.Y. 2007) (reconsideration of class certification orders justified by intervening events); Conant v. McCaffrey, 172 F.R.D. 681, 693-94 (N.D. Cal. 1997) (class redefined by court and recognizing that court can redefine the class at any point in the litigation).

2. See, e.g., Smilow v. Sw. Bell Mobile Sys., Inc., 323 F.3d 32, 39-40 (1st Cir. 2003).

3. See Chapter 8.1 of this MANUAL for a discussion of the Eleventh Amendment.

4. Future class members are commonly included, especially when conditions continue to harm individuals coming into the class, if the offending behavior may continue after current class members’ claims are resolved. See, e.g. J.D. v. Nagin, 255 F.R.D. 406, 414 (E.D. La. 2009); Reynolds v. Giuliani, 118 F. Supp. 2d. 352, 388-89 (S.D.N.Y. 2000). See also Armstead v. Coler, 914 F.2d 1464, 1465 (11th Cir. 1990).

5. For a recent example, see Luiken v. Domino’s Pizza, LLC, No. 09-516 (D. Minn. June 21, 2010) (in any state except New York and California); see also the following definition of “class” in a nationwide class action attacking Nissan’s financing scheme: “[A]ll African American consumers who obtained vehicle financing from NMAC in the United States pursuant to NMAC’s ‘retail plan—without recourse’ between January 1, 1990, and the date of judgment.” Cason v. Nissan Motor Acceptance Corp., 212 F.R.D. 518, 523 (M.D. Tenn. 2002). The classic case for nationwide classes was Califano v. Yamasaki, 442 U.S. 682 (1979), which specifically approved the concept.

6. See Kline v. Sec. Guards Inc., 196 F.R.D. 261, 265-69 (E.D. Pa. 2000), vacated on other grounds, 386 F.3d 246 (3d Cir. 2004), for an example of plaintiffs struggling to define a class that does not require the court to reach the merits to determine whether a putative class member is covered in the class definition (plaintiffs’ class definition of “all persons whose communications were intercepted by electronic surveillance” was found unacceptable since definition would require “minihearings” on whether interceptions had occurred and whose communications were actually intercepted).

7. For a discussion of exhaustion of administrative remedies, see Chapter 3.4 of this MANUAL.

8. DL v. District of Columbia, 450 F.Supp.2d 11 (D.D.C. 2006) (class challenging municipality's failure to provide free and appropriate public education because of breach of "child find" duty need not exhaust administrative remedies); DL v. District of Columbia, 237 F.R.D. 319, 323 (D.D.C. 2006) (certifying class over exhaustion defenses). Note, however, that the grant of certification in DL was vacated on other grounds in 2013.  See DL v. District of Columbia, 713 F.3d 120 (D.D.C. 2013).

9. Fed. R. Civ. P. 23(c)(4)(B).

10. See Warren v. Xerox Corporation, No. 01-CV-2909 (E.D.N.Y. Jan. 26, 2004).

11. Compare Federal Judicial Center, Manual for Complex Litigation (Third) § 30.1 with Federal Judicial Center, Manual for Complex Litigation (Fourth) § 21.14. For discussions that emphasize the importance of the pleadings as a basis for certification decisions, see In re Am. Med. Sys., Inc., 75 F.3d 1069, 1086 (6th Cir. 1996) (decision on certification should be deferred pending discovery if existing record inadequate for determination).

12. See Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 160 (1982); Roe v. Operation Rescue, Inc., 123 F.R.D. 500, 502 (E.D. Pa. 1988) (denying class discovery and certifying class as court need only inquire into facts as presented in pleadings and affidavits if documents sufficiently indicate requirements met).

13. Gariety v. Grant Thornton, LLP, 368 F.3d 356, 365-67 (4th Cir. 2004).

14. See, e.g., Vinole v. Countrywide Home Loans, 571 F.3d 935, 942 (9th Cir. 2009); Mills v. Foremost Ins. Co., 511 F.3d 1300, 1309-11 (11th Cir. 2008).  Consult your local rules of court, which may offer guidance or impose requirements on pre-certification discovery and the process for obtaining it.

15. Campbell v. A.C. Petersen Farms, Inc., 69 F.R.D. 457 (D. Conn. 1975) (employment discrimination (class discovery unnecessary when pleadings and affidavits present sufficient facts on contested numerousness issue).

16. 3 William Rubenstein, Alba Conte & Herbert B. Newberg, Newberg on Class Actions § 7:8 (4th ed. 2002 & June 2010 Supp.).

17. In re Initial Public Offering Securities Litig., 471 F.3d 24, 41 (2d Cir. 2006).  For a general discussion of evidentiary hearings, see 3 Rubenstein, Conte & Newberg, supra note 16, § 7:9. See also Manual for Complex Litigation (Fourth), supra note 11, § 21.21 (evidentiary hearing “may be” but not “is” necessary in challenge to factual basis for class certification);

18. See, e.g., Heerwagen v. Clear Channel Commc’ns, 435 F.3d 219, 234 (2d Cir. 2006); Lienhart v. Dryvit Systems, Inc., 255 F.3d 138, 146 (4th Cir. 2001).

19. Manual for Complex Litigation (Fourth), supra note 11, § 21.14. See also, Fed. R. Civ. P. 23(c)(1) advisory committee’s notes, 2003 amends.

20Fed. R. Civ. P. 23(c)(1) advisory committee’s notes, 2003 amends.; See, e.g., Gene & Gene LLC v. Biopay LLC, 624 F.3d 698, 703, n.3 (5th Cir. 2010); Bell v. Lockheed Martin Corp., 270 F.R.D. 186, 198-99 (D.N.J. 2010).

21. Manual for Complex Litigation (Fourth), supra note 11, § 21.14.

22. See West v. Circle K Stores, Inc., No. CIV. S-04-0438, 2006 U.S. Dist. LEXIS 25164, at *2; 2006 WL 1652598 (E.D. Cal. Feb. 14, 2006) (pre-certification discovery may be limited to particular subclass); Transamerican Ref. Corp. v. Dravo Corp., 139 F.R.D. 619, 621-22 (S.D. Tex. 1991) (limiting discovery to fifty of 6,000 absent class members).

23. Manual for Complex Litigation (Fourth), supra note 11, § 21.14.

24. See, e.g., Dellums v. Powell, 566 F.2d 167, 187 (D.C. Cir. 1977), cert. denied, 438 U.S. 916 (1978); Barham v. Ramsey, 246 F.R.D. 60 (D.D.C. 2007); Bell v. Woodward Governor Co., No. 03 CIV. S-04-0438, 2005 U.S. Dist. LEXIS 26757; 2005 WL 3299179 (N.D. Ill. Nov. 7, 2005); Mehl v. Canadian Pac. Ry., 216 F.R.D. 627, 631 (D.N.D. 2003).

25. 7B Charles A. Wright et al., Federal Practice and Procedure (3d ed. 2005 & Supp. 2010) § 1796.1, at 57; In re Carbon Dioxide Industry Antitrust Litig.,155 F.R.D. 209 (M.D. Fla. 1993).

26. See, e.g., Sibley v. Sprint Nextel Corporation, No. 08-2063 (D. Kan. Oct. 6, 2009); Schwartz v.  Celestial Seasonings Inc., 185 F.R.D. 313 (D. Colo. 1999) (allowing discovery of absent class members in form of clear, good-faith questionnaire relating to damages and alleged reliance); Transamerican Refining Corp. v. Dravo Corp., 139 F.R.D. 619 (S. D. Tex 1991) (discovery by interrogatories and request for documents generally allowed when relevant to common questions, posed in good faith, not unduly burdensome, and information not available to class representatives).

27. See Boynton v. Headwaters, Inc., 2009 U.S. Dist. LEXIS 94949, at *3–4, 2009 WL 3103161, at *1 (W.D. Tenn. Jan. 30, 2009); Collins v. Int’l Dairy Queen, 190 F.R.D. 629, 630-31 (M.D. Ga. 1999) (citing Clark v. Universal Builders, 501 F.2d 324 (7th Cir. 1974)).

28. Sibley, 2009 U.S. Dist. LEXIS at *6–7, 2009 WL 3244696 at *2; McCarthy v. Paine Webber Group, Inc., 164 F.R.D. 309, 313 (D. Conn. 1995); See also Cox v. Am. Cast Iron Pipe Co., 784 F.2d 1546 (11th Cir. 1986) (requiring special circumstances and good cause be shown).

29. Ferraro v. General Motors Corp., 105 F.R.D. 429, 432 (D.N.J. 1984).  

30. See Brink v. First Credit Res., 185 F.R.D. 567, 571 (D. Ariz. 1999) (plaintiff’s financial commitment sufficient where he avers his willingness to pay his pro rata share of litigation expenses); Waldman v. Electrospace Corp., 68 F.R.D. 281 (S.D.N.Y. 1975); 7A Wright et al., supra note 25, § 1767, at 381-88. 

31. Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 356 (1978). See also Sollenbarger v. Mountain State Tel. and Tel. Co., 121 F.R.D. 417 (D.N.M. 1988) (where cost of alternative method “drastic,” plaintiffs could notify potential class members via insert in monthly bills sent by defendant).

32. See, e.g., Randleman v. Fidelity National Title Insurance Company, 646 F.3d 347 (6th Cir. 2011); Manual for Complex Litigation (Fourth), supra note 11, § 21.141.

33. See, e.g., Connor v. Perdue Farms, Inc., No. 11-888, 2013 WL 5977361 (D.N.J. Nov. 7, 2013) (granting motion to bifurcate as consistent with fairness, efficiency, and economy); In re SemGroup Energy Partners, L.P., Securities Litigation, No. 08-MD-1989 (N.D. Okla. Dec. 21, 2010) (denying motion to bifurcate class and merit discovery because facts and issues were inextricably intertwined); In re Hamilton Bancorp, Inc. Securities Litigation, No. 01CV0156 (S.D. Fla. Jan. 14, 2002) (directing development of discovery plan that prioritizes class-related discovery but does not deprive parties of merits discovery).

34. See Connor, No. 11-888, 2013 WL 5977361; SemGroup Energy Partners, L.P., Securities Litigation, No. 08-MD-1989.

Updated 2014 by Sarah Somers

7.3 Defining and Managing a Class (part two)

Updated 2014 by Sarah Somers

7.3.D. Moving for Class Certification

Rule 23(c)(1) now requires that the court rule on class certification “ at an early practicable time.”/1/ Many local rules set specific time limits, generally ninety days from the filing of the complaint, for the filing of the motion./2/ Other local rules have shorter/3/ or longer/4/ time frames. Whatever the local rule provides, counsel should consider filing the motion for class certification at the time of filing the complaint./5/ Failure to file a timely motion for class certification can result in the striking of the class claims or the denial of the motion for lack of adequate representation./6/ If there is a need for a clear deadline for filing and discovery, plaintiffs should seek a stipulation or file a motion to be allowed to file the class certification motion after completion of class discovery.

If plaintiffs, pursuant to Rule 65, move for preliminary relief on behalf of the class, filing the motion for class certification with or before the motion is appropriate. If mootness is a potential problem, a motion for class certification should be filed quickly./7/ Generally, once a class is certified, certification “relates back” to the date of filing of the complaint; post-filing mootness is immaterial so long as mootness occurred after certification. An exception to the “relates-back” rule is made, however, if class certification cannot reasonably be decided before the class representatives’ claims become moot because of the transitory nature of the claims./8/ Plaintiffs should nevertheless file for certification quickly and urge expedited action on the motion if necessary./9/

The motion for class certification should set forth briefly how the named representative or class or both meet each requirement of Rule 23 and the specific class definition requested by plaintiffs./10/ Merely reciting Rule 23 boilerplate language without relating each requirement to the particular class action is not useful. Any documents necessary to prove the Rule 23 requirements should be filed with the motion./11/ These may include documents collected during discovery if class discovery is completed. If discovery is not completed, the motion should discuss the discovery requested. Consideration should also be given to filing motions to shorten discovery in order to move the class certification issue forward.

Prior to the 2003 amendments to Rule 23, courts were permitted to conditionally certify a class pursuant to Federal Rule of Civil Procedure 23(c)(1) and to reserve the opportunity to reexamine the certification following more extensive discovery./12/ Conditional certification has now been removed from Rule 23(c)(1)./13/  Nonetheless, one circuit court has found that conditional certification still may be appropriate./14/

7.3.E. Interlocutory Appellate Review of Denial or Grant of Certification

Rule 23(f) now permits a circuit court, in its discretion, to permit an interlocutory appeal of an order granting or denying class certification. A petition to file permission to appeal must be filed within 14 days./15/ The courts caution, however, that granting these types of appeals should not become routine./16/ Courts describe the relevant considerations as: (1) whether the district court’s ruling is likely to be dispositive of the litigation by creating a “death knell” for either party; (2) whether the party seeking review shows a substantial weakness in the certification decision such that the decision would likely constitute an abuse of discretion; (3) whether the appeal would permit the resolution of an unsettled legal issue important to the case and important in and of itself, particularly if it involves Rule 23 jurisprudence; (4) whether the court should consider the nature and status of the litigation before the district court; and (5) whether future events may make interlocutory appeal more or less appropriate./17/

7.3.F. Notice of Class Certification

Once the class has been certified, counsel must decide whether notice of class certification is required, what kind of notice is required and whether notice of opt-out rights is required for their particular class action. Rule 23(c)(2) sets forth the notice requirements in class action suits. Notice requirements for class actions brought under 23(b)(1) and (2) are flexible and do not require individual notice while individual notice is required in Rule 23(b)(3) suits. Notice of opt-out rights is required in Rule 23(b)(3) cases. The court has discretion under Rule 23(d)(1)(B) to order notice at any time in any Rule 23 lawsuit for the protection of the class members or the fair conduct of the lawsuit.

Rule 23(c)(2)(A) simply provides that in class actions brought under Rule 23(b)(1) or (b)(2), “the court may direct appropriate notice to the class.” Notice is not required either before or after certification, or, indeed, at all./18/ Because there is no right to opt out of a Rule 23(b)(1) or 23(b)(2) class, the need for notice is diminished and should be "exercised with care."/19/ Unlike suits brought under Rule 23(b)(3), if notice is required, it need not be individual./20/ This flexible approach recognizes that the cost of notice may “prove crippling and the benefits may be relatively small.”/21/

However, notice to all class members of the pendency of the action before certification or judgment is frequently helpful, for a number of reasons. It may be helpful in locating additional witnesses or obtaining other evidence from class members. Early notice may expose potential conflicts among class members. Locating and notifying as many class members as possible also preserves plaintiffs’ ability to locate the class and administer relief after judgment. If the court is not inclined to order individualized notice, use discovery to obtain lists of class members and consider hiring an outside firm to find last known addresses. This approach may avoid the problem of some class members not receiving the relief to which they are entitled because they cannot be located after many years of litigation.

The 2003 Amendments continue the requirement that individual notice to class members in Rule 23(b)(3) cases must be provided after the class is certified and before judgment . However, it added a requirement that the notice “must concisely and clearly state in plain, easily understood language” information about the nature of the action, the class definition, the claims, issues or defenses, the right to enter an appearance through counsel, the right to opt-out, and the binding effect of the judgment./22/

A court has discretion to order the defendant to cover the expense of developing the list of class members in certain circumstances./23/ Also, a court may order defendants to give the notice when they may do so with less difficulty or expense than the representative plaintiffs, or when liability has been established./24/ Notice may also be ordered after the class is certified and before judgment./25/

Regardless of whether the class action is certified under subdivision (b)(1) or (b)(2), or (b)(3) notice after a judgment in favor of the plaintiffs or after settlement may be very helpful depending on the type of case. If the relief requires the defendant to do something retroactively the class members need to know of their entitlement. Further, even in prospective relief cases the class members may need to know of their right, for example, to apply or reapply for benefits. Without notice, class members are unaware of either the prospective change in their legal status or their right to relief. Notice should inform the class members of the legal ruling, the effect of the ruling both prospectively and retrospectively, the mechanism for obtaining retroactive monetary relief if available (with a form to begin the process, if appropriate), the names and addresses of counsel for the plaintiffs, and a phone contact to ask questions or to report problems in obtaining relief. In public benefit cases where the Eleventh Amendment precludes a federal court from ordering retroactive benefits as monetary damages, a Quern notice should be sent./26/

Unlike the cost of pre-certification notice, the cost of post-judgment notice is properly borne by the defendant. Indeed, courts have ordered defendants to bear the costs of notice once it has ruled against the defendant on the merits. /27/ Whether class notice is required under Rule 23(c)(2) or is requested under Rule 23(d)(1), the prayer for relief in the complaint should include a request for notice of the relief. Likewise, at the time of judgment or settlement, plaintiffs should include a request for notice in the proposed order or settlement document, attach a copy of the actual proposed notice, and detail the proposed or agreed-upon method of distribution.

Notices sent to class members should be drafted in plain English and translated if appropriate./28/ Individual notification of class members may not be required. Other forms of notice may be utilized such as publication in newspapers, posting on bulletin boards where class members are likely to see the notice (unemployment offices, public housing offices, nurses’ stations), inclusion in regular newsletters, and the like—depending on the circumstances of the case./29/

Plaintiffs’ counsel should try to obtain the most current addresses possible for all class members. Sometimes this can be done through the defendant’s files. Posting of notices in places where class members are likely to see them or placement of notices in newspapers commonly read by class members may assist counsel in identifying additional class members. Plaintiffs cannot reach every class member, however, but should nevertheless make every effort to locate members and to obtain full relief for each of them. Responding to questions from class members and assisting them in obtaining relief, even when only a small percentage responds, is frequently a major commitment of time and resources by an office and must be carefully orchestrated.

7.3.G. Communication with Class Members

Class counsel frequently wants to communicate informally with potential class members. The question of whether plaintiffs’ counsel or defendant’s counsel can have access to information identifying class members or communicate with them during litigation arises regularly.

In Gulf Oil v. Bernard, the Supreme Court prohibited limits on communications without a clear record and specific findings reflecting that the need for limits outweighed the interference with the rights of the parties./30/ Even in those circumstances justifying a limitation, the Court stated that any court intervention should be carefully and narrowly drawn to minimize interference with First Amendment rights.

Since Gulf Oil, courts generally have not imposed case-specific limitations on communications between plaintiffs’ counsel and class members. Absent a record of coercive or misleading communications, there would seem to be no basis for restraining communications. Courts, however, have intervened when defendants urged class members to “opt out” of the class action or were making factual misrepresentations to the plaintiff class members./31/

______________________________________________________________________________________________________

1. This is a change from the language pre-2003 amendments requiring a ruling “as soon as practicable.” The Advisory Committee notes that “[t]he ‘as soon as practicable’ language neither reflected prevailing practice nor captured the many valid reasons that may justify deferring the initial certification decision.” Fed. R. Civ. P. 23(c)(1)(A) advisory committee’s notes, 2003 amends.

2. See, e.g., L.R. 23-3 (C.D. Cal.); L.R. 23.1(c) (N.D. Ohio); L.R. 23.2 (N.D. Tex.). But see L.R. 23.1(c) (S.D. Ill.) (timing of motion established during mandatory scheduling and discovery conference).

3. See, e.g., L.R. D. Conn. App., Standing Order on Scheduling in Civil Cases, 2(b) L.R., p. 99 (60 days).

4. L.R. 23(d) (W.D.N.Y.) (120 days).

5. Generally there is no reason to delay the filing of the motion for class certification. Courts are cautioned to decide such motions promptly, Bertrand v. Maram, 495 F.3d 452, 455 (7th Cir. 2007), and discouraged from deciding dispositive motions before class certification motions. Schwarzschild v. Tse, 69 F.3d 293, 295 (9th Cir. 1995).

6. See Culver v. City of Milwaukee, 277 F.3d 908, 912 (7th Cir. 2002). 

7. Gratz v. Bollinger, 539 U.S. 244, 261-68 (2003) (reiterating the general importance of class certification and its usefulness in avoiding mootness); Bertrand, 495 F.3d at 455.

8. For a case discussing these issues in the context of pre-trial detainees, see Bowers v. City of Philadelphia, No. 06-CV-3229, 2006 U.S. Dist. LEXIS 71914 (E.D. Pa. Sept. 28, 2006).

9. See Chapter 3.3 of this MANUAL for a full discussion of mootness and the Sosna or Gerstein line of cases.

10. Local rules may require these specifics in the complaint. See, e.g., L.R. 23.1(2) (S.D. Fla.). Pleading these elements even in the absence of a rule is good practice.

11. See Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 160 (1982) (courts are not restricted to pleadings when making certification decisions to determine if rule’s requirements are met). See also Fox v. Cheminova Inc., 213 F.R.D. 113, 122 (E.D.N.Y. 2003).

12. See, e.g., In re Diet Drugs Prods. Liab. Litig., 282 F.3d 220 (3d Cir. 2002); Thiessen v. Gen. Elec. Capital Corp., 267 F.3d 1095 (10th Cir. 2001). 

13. Fed. R. Civ. P. 23(c)(1) advisory committee’s notes, 2003 amends.

14. Denney v. Deutsche Bank Sec., Inc., 443 F.3d 253, 270 (2d Cir. 2006).

15. Fed. R. Civ. P. 26(f). See In re D.C. Water & Sewer Auth., 561 F.3d 494, 495 (D.C. Cir. 2009). A motion for reconsiderations of a certification order filed within 14 days may toll that period. Gutierrez v. Johnson & Johnson, 523 F.3d 187, 192 (3d Cir. 2008); but see in re D.C. Water & Sewer Auth., 561 F.3d at 496-97.

16. See In re Delta Air Lines, 310 F.3d 953 (6th Cir. 2002).

17. Prado-Steiman v. Bush, 221 F.3d 1266, 1272-77 (11th Cir. 2000) (Clearinghouse No. 53,363), and cases cited therein. See also In re Delta Air Lines, 310 F.3d at 958-60; Sumitomo Copper Litig. v. Credit Lyonnais Rouse Ltd., 262 F.3d 134 (2d Cir. 2001); Lienhart v. Dryvit System, Inc., 255 F.3d 138, 141 (4th Cir. 2001); Bolin v. Sears, Roebuck and Co., 231 F.3d 970, 972-74 (5th Cir. 2000) (upholding constitutionality of U.S. Supreme Court’s adoption of Rule 23(f)). See also, e.g., In re Rail Freight Fuel Surcharge Antitrust Litigation–MDL No. 1869, 725 F.3d 244, 251-52 (D.C. Cir. 2013) (holding that "death knell" standard can be satisfied by showing unwarranted financial "pressure to settle nonmeritorious or marginal claims" (quoting Newton v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 259 F.3d 154, 168 (3d Cir. 2001))).

18. Sosna v. Iowa, 419 U.S. 393, 397 n.4 (1975); In re Integra Realty Resources Inc., 262 F.3d 1089, 1109 (10th Cir. 2001) (whether notice is required within discretion of court).

19Fed. R. Civ. P. 23(c)(2) advisory committee’s notes

20. Sims v. Bank of Am. Corp., 2008 U.S. Dist. LEXIS 11972, at *26-28, 2008 WL 479988, at *9 (E.D.N.Y. Feb. 19, 2008); Meachem v. Wing, 227 F.R.D. 232, 235 (S.D.N.Y. 2005).

21. Federal Judicial Center, Manual for Complex Litigation (Fourth) § 21.311 (2004); Fed. R. Civ. P. 23(c)(2) advisory committee’s notes.

22See Fed. R. Civ. P. 23(c)(2) advisory committee’s notes (noting that the Federal Judicial Center has devised sample notices reflecting those requirements).

23. But see Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 178 (1974) (usual rule is that plaintiffs must bear the cost of notice).  For several exceptions to this usual rule, see 5-23 James Wm. Moore et al., Moore's Federal Practice  - Civil § 23.106 (2011).

24. Oppenheimer Fund Inc. v. Sanders, 437 U.S. 340, 355-56 (1978) (noting that defendants have been required to make notice as part of periodic mailings); S. Ute Indian Tribe v. Amoco Prod. Co., 2 F.3d 1023, 1029-31 (10th Cir. 1993). See also 7AA Charles A. Wright et al., Federal Practice and Procedure § 1788, at 536-46 (3d ed. 2005 & Supp. 2010).

25. German v. Fed. Home Loan Mortgage Co., 158 F.R.D. 145, 160-61 (S.D.N.Y. 1996).

26. See Quern v. Jordan, 440 U.S. 332 (1979); Edelman v. Jordan, 415 U.S. 651 (1974).

27. Hunt v. Imperial Merch. Servs., Inc., 560 F.3d 1137, 1143 (9th Cir.), cert. denied, 130 S. Ct. 154 (2009); Macarz v. Transworld Sys., Inc., 201 F.R.D. 54, 58 (D. Conn. 2001).

28. For an example of a notice that is translated, see Smith v. Daimler Chrysler Fin., Civ. No. 00-6003 (D.N.J. July 29, 2005).

29. See generally Fed. R. Civ. P. 23(c)(2) advisory committee’s notes, 2003 amends; 7AA Charles A. Wright et al., Federal Practice and Procedure § 1788 (3d ed. 2005 & Supp. 2010) (discussing the mechanics of giving notice, including “unanswered” questions presented by Rule 23(c)(2), such as timing of notice, identity of sender, and allocation of notice costs).

30. Gulf Oil Co. v. Bernard, 452 U.S. 89, 101-02 (1981). See also Hoffman-LaRoche Inc. v. Sperling, 493 U.S. 165 (1989) (application of Gulf Oil in Age Discrimination in Employment Act case); Gates v. Cook, 234 F.3d 221, 227 (5th Cir. 2000) (reversing no-contact order between plaintiffs’ substitute counsel and class members).

31. See e.g. Guifu Li v. A Perfect Day Franchise, Inc., 270 F.R.D. 509, 518 (N.D. Cal. 2010) (defendant’s ex parte solicitation for opt-outs before class certification held as an exercise of coercion); Gortat v. Capala Bros., 2010 U.S. Dist. LEXIS 45549, at *20, 2010 WL 1879922, at *6 (E.D.N.Y. Mar. 10, 2010) (issued orders limiting contact between defense counsel and potential class members); Kleiner v. First Nat’l Bank of Atlanta, 751 F.2d 1193 (11th Cir. 1985) (affirming sanctions on defense counsel who engaged in ex parte communications with class members seeking their agreement to opt out).



Updated 2014 by Sarah Somers

7.4 Resolution of Class Actions

Updated 2014 by Sarah Somers

Class counsel may determine that settlement of the case is appropriate. If a settlement is reached the court will hold a fairness hearing on the settlement and counsel must give notice of the settlement to class members. As in other aspects of class action litigation, the negotiation between the parties will be scrutinized by the court during the fairness hearing. The court will consider any conflicts between named plaintiffs and the class and issues such as attorney fees. Negotiation, notice of settlement and fairness proceedings are discussed below.

7.4.A. Negotiations

Ethical considerations are somewhat different in class action lawsuits. Class action negotiations are at risk of greater collusion between counsel because there is less client control than in individual suits and because the client to whom counsel is accountable may be “amorphous and widespread.”/1/ Defendants often seek to negotiate plaintiffs’ attorney fees as part of the overall settlement. The Supreme Court addressed this issue in Evans v. Jeff D., which held that this behavior on the part of defense counsel was not unethical./2/ However, the Manual for Complex Litigation suggests that courts reviewing such settlements should examine them for the “fairness of the allocation between damages and attorney fees, noting that “[t]he ethical problem will be eased if the parties agree to have the court make the allocation.”/3/

Persons initiating the class action must be kept apprised of negotiations as they develop. In one disciplinary action, an attorney was suspended and required to pay a fine when he failed to inform his clients about negotiations, entered into a secret agreement in which he was to receive $225,000 in fees, agreed not to represent anyone with related claims and agreed to keep the agreement confidential. The District of Columbia Court of Appeals found this conduct to have violated eight different ethical rules./4/ Courts have cautioned against the inadequacy of lawyer representation and the temptation that lawyers might face, particularly where the individual claims were small, to sell out the class./5/

Counsel may seek to settle a putative class action prior to class certification.  A "settlement class" is one that has been certified at the same time the settlement has been approved./6/ Certification at the time of settlement approval binds all members of the class who have not opted out to the judgment./7/ Settlement classes must satisfy all the requirements of Rule 23(a) and (b)./8/ Whether a class action would be manageable is not considered in settlement classes since the matter, by definition, does not proceed to trial./9/ Because of increased possibilities of collusion, settlement classes are subject to more searching scrutiny./10/

7.4.B. Notice and Settlement

As with many other aspects of class actions, during notice, settlement and fairness proceedings, the court is the protector of the class or putative class. Some courts describe the role of the court at this stage of the proceedings as a fiduciary one./11/ Individual litigants are generally free to compromise their claims and plaintiffs are free to dismiss them voluntarily or, if the complaint has been answered, with the agreement of the defendant under Rule 41(a). Cases filed as class actions generally require more, as detailed in Rule 23(e), and this specific exception is indicated in Rule 41(a).

The 2003 amendments to Rule 23(e) are substantial and are designed to enhance judicial oversight of settlements. Rule 23(e)(1)(A) now provides that court approval is required for “any settlement, voluntary dismissal, or compromise of the claims, issues, or defenses of a certified class.” [Emphasis supplied.] This language was added to “resolve any ambiguity” of the previous language and to make clear that 23(e) applies only to a “certified class” and not to settlements with proposed class representatives that resolve only individual claims./12/ This amendment reverses the rule in most circuits requiring approval of the settlement of pre-certification class actions./13/

The approval by the court is a two-step process: the settlement is presented to the court, which makes a preliminary fairness evaluation. If the preliminary evaluation does not cast doubt on its fairness, the court directs that notice be given for a formal fairness hearing./14/

Rule 23(e)(1)(B) requires notice where the settlement binds the class through claim or issue preclusion and is not required when the settlement only binds the individual class members.  Settlement notice must be prepared in a reasonable manner in all class action settlements, regardless of whether it is a (b)(1), (b)(2) or (b)(3) class./15/ This notice must explain the proposed settlement or dismissal to the class members/16/, specify a means for them to file objections to the proposed terms /17/, set forth any deadline for filing such objections, and inform them of the date of the hearing where their objections will be considered./18/ The form of such a notice should be submitted to the court for approval either as part of the settlement agreement itself or by separate motion. "Reasonable" notice is most commonly notice by mail, but may be supplemented or, when appropriate, replaced by notice by publication. Rule 23 does not necessarily require the party sending the notice to “exhaust every conceivable method of identification.”/19/ This notice need not be individualized. Because both the class and the defendants seek approval of the settlement, courts have shifted the burdens and costs of providing notice to the defendants when appropriate.

Defendants in settled class actions are now required to provide notice of such settlement within ten days of the filing of the agreement on certain federal and state officials./20/ Generally, unless the defendant is a depository institution, the U.S. Attorney General must be served with such notice./21/ The appropriate state official is defined in 28 U.S.C. § 1715(a)(2) and is often the primary regulator of the defendant. The content of the notice is prescribed in 28 U.S.C. § 1715(b). Of potential concern to plaintiffs is that the court may not give final approval of a proposed settlement until at least 90 days from the date the last defendant made notice on the appropriate government officials./22/ With the exception set forth in 28 U.S.C. § 1715(e)(3), a class member is not obligated to comply with the agreement and is not bound by it if this notice is not provided./23/

7.4.C.  Fairness Hearings

The court is required to ensure that the settlement is fair, adequate, reasonable, and not based on collusion. Some courts also consider whether the settlement furthers the public interest./24/ The court has a “heavy, independent duty” in making the approval as the settlement process is more susceptible to abuse than the “adversarial process.”/25/ As described by the Manual for Complex Litigation, the role of the court is to be a “skeptical client” as there is “typically no client with motivation, knowledge, and resources to protect its own interests.”/26/ The court must balance a variety of factors in reaching this determination of fairness. These standards are expressed in various ways by the courts but fundamentally involve the following inquiries/27/: 1) a comparison of the strength of the plaintiff's case against the recovery proposed in the settlement); 2) the complexity and risks of continued litigation; 3) the presence of collusion in reaching a settlement; 4) the comments of class members; and 5) the stage of the proceedings and the amount of discovery completed./28/ Rule 23(h) sets forth in detail the requirements necessary for a court to award attorney fees in class actions.

The 2003 Amendments added Rule 23(e)(3) requiring the parties to identify any side agreements to the settlement. This rule authorizes the court to require disclosure of “related undertakings that, although seemingly separate, may have influenced the terms of the settlement by trading away possible advantages for the class in return for advantages for others. Doubts should be resolved in favor of identification.”/29/ Rule 23(c)(3) does not contemplate discovery of information related to such agreements./30/

A court approving a class action settlement must make findings of facts and conclusions of law to support its conclusion that the proposed settlement is fair, reasonable, and adequate. Those findings must identify and apply the factors employed to draw that conclusion and must be sufficiently detailed to provide an adequate explanation to the class and to the appellate court for possible review. Class members are, of course, permitted to make objections to the proposed settlement /31/ and the court should address those objections in its findings and conclusions./32/ The court may only approve or disapprove the agreement; the court may not rewrite it./33/

The standard of review for decisions regarding settlements is “abuse of discretion.”/34/ However, a review of an interpretation of the agreement is de novo./35 Orders disapproving class settlement are generally not subject to interlocutory review./36/ The Supreme Court held in Devlin v. Scardelletti/37/ that class members who objected to a class settlement were permitted to appeal approval of the settlement without needing to intervene.

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1. Graham C. Lilly, Modeling Class Actions: The Representative Suit As an Analytic Tool, 81 Neb. L. Rev. 1008, 1032 (2003). See also Federal Judicial Center, Manual for Complex Litigation (Fourth) § 21.61 (2004).

2. Evans v. Jeff D., 475 U.S. 717 (1986). See Chapter 9.4 of this MANUAL.

3. Manual for Complex Litigation (Fourth), supra note 1, §§ 13.24 and 21.7.

4. In re Hager, 812 A.2d 904 (D.C. 2002). For a discussion of the ethical challenges in class action representation, see generally Julie Klusas, Saving the Class Action: Developing and Implementing a Model Rule of Professional Conduct for Class Action Litigation, 16 Geo. J. of Legal Ethics 353 (2003).

5. See In re Hager, 812 A.2d 904 (D.C. 2002); Griesz v. Household Bank (Illinois), N.A., 176 F.3d 1012, 1013 (7th Cir. 1999).

6. See Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 618 (1997).

7. For a detailed discussion of settlement classes in a context in which approval of one was overturned, see In re GMC Pick-Up Truck Fuel Tank Prods. Liab. Litig., 55 F.3d 768 (3d Cir.), cert. denied, GMC v. French, 516 U.S. 824 (1995).

8. Amchem Products, Inc. v. Windsor, 521 U.S. 591, 621 (1997).

9. Id. at 629.

10. Id. at 620.

11. See, e.g., Reynolds v. Beneficial Nat’l Bank, 288 F.3d 277, 279 (7th Cir. 2002) (citing In re Cendant Corp. Litig., 264 F.3d 201, 231 (3rd Cir. 2001).

12. Fed. R. Civ. P. 23(e)(1)(A) advisory committee’s notes, 2003 amends.

13. See, Gregory P. Joseph, 2003 Class Action Rules, in 2 Civil Practice and Litigation Techniques in Federal and State Courts 1 (A.L.I.-A.B.A. Course of Study 2003). See also Daniels v. Bursey, No. 03 C 1550, 2004 WL 2358291, 2004 U.S. Dist. LEXIS 20950 (N.D. Ill. Oct. 19, 2004, appeal dismissed 430 F.3d 424 (7th Cir. 2005), cert. denied sub nom. Koresko v. Bursey, 548 U.S. 904 (2006) (rejected claim that putative class action cannot be settled on an individual basis without court approval). But see Schick v. Berg, No. 1:03-cv-05513-LBS, 2004 U.S. Dist. LEXIS 6842 (S.D.N.Y. Apr. 20, 2004), aff’d, 430 F.3d 112 (2d Cir. 2005) (discussing policy protecting putative class member rights pre-certification). See also Manual for Complex Litigation (Fourth), supra note 1, § 21.61 (after describing potential abuses in pre-certification settlements states: “Use of the court’s supervisory authority to police the conduct of proposed class actions under Rule 23(d) may be appropriate in such circumstances”).

14. Manual for Complex Litigation (Fourth), supra note 1, § 21.632-.633.

15. Fed. R. Civ. P. 23(e)(1).

16. The notice need not explain all the details of the settlement so long as the agreement is otherwise made available on a website.

17. The notice need not offer all the reasons a class member might object to the settlement. Int'l Union v. Gen. Motors, 497 F.3d 615, 630 (6th Cir. 2007).

18. See In re Diet Drugs Prods. Liab. Litig., 226 F.R.D. 498, 517-18 (E.D. Pa. 2005). For an example of a notice found insufficient, see White v. Ala., 74 F.3d 1058, 1066 (11th Cir. 1996) (emphasizing that notice must be understandable and rejecting notice written in legalese so dense that even lawyers would have trouble understanding it).

19. Brecher v. St. Croix County, No. 02-C-0450-C (W.D. Wis. May 26, 2004); In re Prudential Ins. Co. of Am. Sales Practices Litig., 177 F.R.D. 216, 232 (D.N.J. 1997); see also Handschu v. Special Serv. Div., 787 F.2d 828, 832-33 (2d Cir. 1986) (publication over period of weeks in several newspapers was sufficient); Burns v. Elrod, 757 F.2d 151, 154 (7th Cir. 1985); Wyatt v. Sawyer, 105 F. Supp. 2d 1234, 1240 (M.D. Ala. 2000) (posting prominently in living areas of all facilities of mental institution, hand-delivered to residents and to advocates for whom hand-delivered deemed clinically inappropriate, mailed to legal guardians, mailed to consumer and advocacy organizations with statewide constituencies, and published in newspapers).

2028 U.S.C. § 1715(b).

21. 28 U.S.C. § 1715(a)(1).

22. 28 U.S.C. § 1715(d).

23. 28 U.S.C. § 1715(e)(1). 

24. See Int'l Union, 497 F.3d at 631.

25. Laube v. Campbell, 333 F. Supp. 2d 1234, 1238 (M.D. Ala. 2004). See also, e.g., In re Dry Max Pampers Litigation, 724 F.3d 713, 715 (6th Cir. 2013) (noting that in class action settlements "there is always the danger that the parties and counsel will bargain away the interests of unnamed class members in order to maximize their own").

26. Manual for Complex Litigation (Fourth), supra note 1, § 21.61.

27. For a detailed discussion of these various factors, see 5-23 James Wm. Moore et al., Moore's Federal Practice  - Civil § 23.164.  

28. Compare Rutter and Willibanks Corp. v. Shell Oil Corp., 314 F.3d 1180, 1188 (10th Cir. 2002) ((1) whether fairly and honestly negotiated; (2) whether serious questions of law and fact exist and place ultimate outcome in doubt; (3) whether value of immediate recovery outweighs mere possibility of future relief after protracted and expensive litigation; and (4) whether parties judge settlement as fair and reasonable), with D’Amato v. Deutsche Bank, 236 F.3d 78, 86 (2d Cir. 2001) ((1) complexity, expense, and likely duration of litigation; (2) reaction of class to settlement; (3) stage of proceedings and amount of discovery completed; (4) risks of establishing liability; (5) risks of establishing damages; (6) risk of maintaining class action through trial; (and in damage actions); (7) ability of defendants to withstand a greater judgment; (8) range of reasonableness of settlement fund in light of best possible recovery; and (9) range of reasonableness of settlement fund to possible recovery in light of all litigation risks). See also Manual for Complex Litigation (Fourth), supra note 1, § 21.62 (setting forth nonexhaustive list of fifteen potentially relevant factors, along with list of criteria courts have utilized in weighing those factors).

29Fed. R. Civ. P. 23(e)(2) advisory committee’s notes 2003 amends.

30. Id

31Fed. R. Civ. P. 26(e).

32. As indicated, the reaction of class members may be considered as a factor in the approval process. See supra note 28 and accompanying text. See Beavers v. Am. Cast Iron Pipe Co., 164 F. Supp. 2d 1290, 1297-98 (N.D. Ala. 2001) (approval of settlement terms by the named plaintiffs and class representatives another factor favoring approval of settlement); United States v. City of Montgomery, 948 F. Supp. 1553, 1568 (M.D. Ala. 1996). In one instance, the opposition by 70 percent of a subclass led the Fifth Circuit to reject a settlement. Pettaway v. Am. Cast Iron Pipe Co., 576 F.2d 1157, 1217 (5th Cir. 1978). Failure to allow intervention of right in the remedy stage may compel an appellate court to vacate approval of a settlement agreement. See Benjamin by and through Yock v. Department of Public Welfare of Pennsylvania, 701 F.3d 938, 948 (3d Cir. 2012). The 2003 Amendments now require that any objections to the settlement may only be withdrawn with the court’s approval. Fed. R. Civ. P. 23(e)(4)(B).

33. Manual for Complex Litigation (Fourth), supra note 1, § 21.61.

34. Wal-Mart Stores, Inc. v. Visa U.S.A., Inc., 396 F.3d 96, 106 n.12 (2d Cir. 2005); Joel A. v. Giuliani, 218 F.3d 132, 139 (2d Cir. 2000).

35. F.W.F., Inc. v Detroit Diesel Corp., 308 Fed. App'x 389, 390 (11th Cir. 2009); Waters v. Int’l Precious Metals Corp., 237 F.3d 1273, 1277 (11th Cir. 2001).

36Moran v. Gannon (In re Touch Am. Holdings, Inc. ERISA Litig.), 563 F.3d 903 (9th Cir. 2009).

37. Devlin v. Scardelletti, 536 U.S. 1 (2002).

Updated 2014 by Sarah Somers