Class Actions: Rule 23(b)(1)(A) + Rule 23(b)(1)(B) MANDATORY class actions --> Like rule 19 on steroids

3 Character Traits of the Limited Fund

1. An actual limited fund --> defendant net worth is less than the aggregate amount of claims out there 2. whole of the inadequate fund to be devoted to the claims 3. in a pro rata manner

Which of the 4 Class Action Groups are Mandatory?

23(b)(1)(A) and 23(b)(1)(B) and 23(b)(2)

Ortiz v. Fibreboard & In re Simons --> Rule 23(b)(1)(B) The Limited Fund Class mass of asbestos cases resulted in ∆ battling two fronts: (1) the mounting #s of personal injury suits & (2) insurance coverage battles Agreement: insurance companies, ∆ and πs lawyers agree that ∆s will create a trust and the πs will agree to stop suing Fibreboard - Class Action Settlement requiring certification But the defendant insurance companies only put 1.5 billion in the trust, and they have deeper pockets than that so can the court make this class action settlement a MANDATORY class action?

NO 23(b)(1)(B) --> The Limited Fud Class requires there to be an actual limited fund Here, the defendant is holding back significant amounts of its net worth, so we can't make this a mandatory class action The purpose of the Limited Fund Class is to protect plaintiffs, not the defendant Here, the settlement would have protected the defendant and hurt the plaintiffs

Do courts typically use Rule 23(b)(1)(B) for mass personal injury tort claims?

NO because the court can't accurately tell how much each person's claim is going to be. It differs so much for each personal injury so does not make sense to mandatorily join plaintiffs and have them limited in their judgment because of the pro rata nature of the limited fund

In re Simon II Litigation: Rule 23(b)(1)(B) The Limited Fund Class Tobacco companies fraudulently denied and concealed the health risks of cigarettes Tobacco company argues there is a constitutional ceiling on punitive damages against one party Wanted to treat the supposed constitutional ceiling on total punitive damages as a limited fund, will the court allow the tobacco companies to use rule 23(b)(1)(B)?

No, the overarching problem is that this is speculation of future constitutional rulings. SCOTUS has never said that the repeated award of PD can constitute a true limited fund instead will be ratioed in each judgment

How does a mandatory class action benefit a defendant

Of course the defendant doesn't want to be sued, but when it is, it could be faced with inconsistent judgments if the court lets some of the plaintiffs who want injunctive relief, to leave and file their own suits

Are Rule 23(b)(1)(A) and Rule 23(b)(1)(B) based on efficiency or fairness?

Rule 23(b)(1)(A) --> Fairness to defendant Rule 23(b)(1)(B) --> Fairness to Plaintiffs

Why do we call Rule 23(b)(1)(A) and Rule 23(b)(1)(B) Rule 19 on steroids?

Rule 23(b)(1)A) and Rule 23(b)(1)(B) are mandatory class actions, meaning no plaintiff can opt-out because we want to either 1. protect the existing defendants from inconsistent judgments (rule 19 test) and Rule 23(b)(1)(A) and 2. Will the missing party suffer harm if they are absent? (rule 19 test) and Rule 23(b)(1)(B)

23(b)

Tells us the class must fall within one of the 4 groups listed

Morgan v. Deere Credit (TX state court, NOT FEDERAL COURT) a TXRCP rule 42 (the equivalent of rule 23(b)(1)(A) in federal rules of civil procedure) Court discusses the various interpretations of the incompatible standards class action: Texas residents entered financing agreements with Deere Credit to purchase boats Deere failed to use the statutorily required font on its choice of law clauses. Without this font, they could not charge over 10% interest, which Deere was doing. This led to usury claims against Deere This is TX state court, so they use the Texas better rule. what is the result?

Texas better rule says that monetary damages can put the defendant in an incompatible position, so the defendant is a mandatory class member

Texas STATE COURT standard for what would make the defendant face incompatible standards --> The "Texas Better Rule"

The defendant can be placed in an incompatible spot even when the plaintiffs are only seeking monetary judgments That reasoning does not make sense to me, you just pay or you don't based on each case, no incompatible position there When you have the potential for an injunction in one case and then a different injunction in the next, then I can see the incompatible position YOU DON'T HAVE TO LIKE THE RULE, THE RULE IS THE RULE!

Limited Fund Problem

When you total up all of the aggregated liquidated claims GREATER than the fund available to satisfy them.

If Morgan v. Deere were in federal court in TX, would the result be different?

Yes, under the federal 23(b)(1)(A) rule, the federal courts have ruled that the defendant is only placed in an incompatible spot if numerous plaintiffs are seeking injunctive relief so this would not be a mandatory class, so plainitffs aren't able to leave

What is a "mandatory" class action?

members can't opt-out of the class action

Federal standard for what would make the defendant face incompatible standards

monetary damage claims don't put the defendant in an incompatible position injunctive relief and temporary orders would put the defendant in an incompatible spot "would trap the party opposing the class in the inescapable legal quagmire of not being able to comply with one such judgment without violating the terms of another."

23(b)(1)(A) Incompatible Standards Class

without a class, a defending party might face incompatible judgments if we don't have class treatment of this issue

23(b)(1)(B) The Limited Fund Problem

without a class, the potential class members' individual claims might as a practical member be hurt (the limited fund problem)