Class Actions
Rule 23(c) - Certification Order
"Time to issue: At an early practicable time after a person sues or is sued as a class representative, the court must determine by order whether to certify the action as a class action." "Early practicable time" length depends on circumstances of the case. - Depends on case, the more complex, the more time allowed to court to decide.
Rule Analysis - Rule 23(b)(1)A
23(b)1: Actions against individual class members would create risk of: 23(b)(1)A: Inconsistent or varying decisions that would subject party opposing class to inconsistent standards Ex: Boggs v. DAC (1991) Facts: Plaintiffs seek class certification for all people living within six miles of a uranium processing plant who suffered exposure to hazardous materials. Rule: Plaintiff need not show actual injury, just needs to show reasonable risk of exposure --Case is complex, individual litigations may subject uranium plant to different standards.
Rule Analysis - Rule 23(b)(1)B
23(b)1B: Actions against individual class member would impede a class member's ability to protect his or her own interests. Traditional and most common use is limited funds. -- involves cases in which class members have a claim against a limited fund such as an insurance policy or a trust fund. The worry is suits by individual claimants may deplete or exhaust the fund to the detriment of other class members who may sue later -Telectronics case Rule: Court should not run risk of allowing limited funds to be created from post filing settlements [originally from Oritz case] --Limited Fund must exist prior to litigation ---negotiations must be made at arm's length: In this case, motive of settlement was to cut liability of parent company ---Plaintiff's lawyer's should not be overcompensated for settling prematurely. ---Parent company could have paid individual claims.
Rule 23 (b)(1): Black Letter
23(b): Types of Class Actions: A class action may be maintained if Rule 23(a) is satisfied and if: 1. Prosecuting separate actions by or against individual class members would create risk of: a. Inconsistent or varying adjudications with respect to individual class members that would establish incompatible standards of conduct for the party opposing the class; or b. Adjudications with respect to individual class members that, as a practical matter, would be dispositive of the interests of the other members not parties to the individual adjudications or would substantially impair or impede their liability to protect their interests;
Rule 23(b)(3) Superiority
Class action must be superior to any other method of adjudication - probably only way to efficiently conduct law suite Compare it to alternatives, like whether individual claims are large enough for plaintiffs to sue individually, whether it would be better for one plaintiff to do test case where court would rule and future plaintiffs could rely on issue and claim preclusion findings. Court may not accept 23(b)(3) case if doing so would be disproportionately harmful to defendant.
Rule Analysis - Rule 23(a) [Numerosity]
Class is so numerous that joinder of all members would be impracticable, but not impossible. - Ask "would class members not be motivated to act individually?" Small claim size for each plaintiff, would cut towards class action. - No Magic number - Only need to provide reasonable estimation of class numbers, need not show that numeroisty makes joinder impossible, just impracticable. [Robidoux case] -Factors: Look at geographic distance, amount of claims, standard form dispute, financial resources of members, requests for injunctive relief which would involve future class member. [Robidoux case]
Rule 23(b)(3) Predominance
Class must be homogenous and subject to clear, common wrongful conduct. Conduct must have a common effect - same injury - on class members. Cohesiveness. [Ex: Drug company sells drug that has a range on negative effects on different users. No class actions because users do not have common effects.] [Ex: Amchem case - court considered whether nationwide settlement class action brought against asbestos manufacturers met 23(b)(3) predominance requirement. Court determined that requirement was not met because each member was harmed differently, or not at all.] Worngful death cases are usually not subject to class action, unless the injury of the class members arose from the same event - like the same airplane crash.
Rule Analysis - Rule 23(a) Quasi Factor - Ascertainibility
Common thread in Rule 23(a) is ascertainability. Members of the class should be identifiable via methods that are administratively easy to carry out. Such as, don't need additional hearings to determine who class members are. Must be ascertainable under objective criteria.
Rule Analysis - Rule 23(a) [Commonality] Part 1 - Older Requirement
Commonality: There are questions of law or fact common to the class. [Chandler - case involving purchase of jeep and warranty not transferring over to Chrysler dealership] i. Defendant engaged in standardized conduct towards plaintiffs. ii. Ex: Car dealership uses standard form documents that misrepresents information to many potential class members [gave false impression that certain fees were non negotiable] Should be at least "common nucleus of operative facts" - means significant overlap in relevant facts and laws [Chandler] Class members should have common goals. [Unlike in Hansberry, where seller did not have same goal as seller in prior case]
Hanlon v. Chrysler Corp.
Facts: Chrysler-defendant is sued regarding faulty jeep-latch handles. Chrysler negotiates settlement with consolidated cases. Lower court certifies consolidated settlement under 23(b)(3). Objectors appeal settlement class action status. Ruling: 23(a) -Commonality: Claims were from same source, faulty jeep handles. Small variation in remedies sought is okay. -Tyicality: representative parties should have claims that are reasonably "co-extensive" with absent class members. Here, representatives were from different states and focus was to obtain defect free jeep latches, thus representative claims were typical of absent class members. Need not be "substantially identical." -Adequacy of Representation: Okay here, each plaintiff had same problem: defective latch that required fixing. No real difference in severity of injury. Ruling: 23(b)3 -Predominance: Requirement met in this case. Generally same consumer protection laws, with small differences. Worngful death actions excluded from class. Sufficient common issues, like remedy sought, design defect, Chrysler's prior knowledge of defect. -Superiority: Met here as well. For Individual claims, remedy would be dwarfed by litigation costs. State law Statute of limitation has run for some of the class members, individual claims would burden judiciary. Side Issue: Kempton could not opt-out for other Georgia class members, only could opt-out himself.
Phillips v. Shutts (1985)
Facts: PPC took a lease out on a land to drill oil. Plaintiff sued for interest in royalties. Plaintiff was seeking class certification on behalf of all people who were entitled to royalties. Defendant argued Kansas court should not be able to hear case because many of the members of the class lived outside the state of Kansas and had little to no other contact with state other than the law suit. a. Rule: In class actions such as this, plaintiff must receive notice plus an opportunity to be heard and participate in litigation. i. However, it is sufficient for plaintiff to get notice and get option to opt-out [was reasonably calculable]. Okay for opt-in to be default. A fully descriptive notice sent first class mail to all known class members is sufficient, would be too procedurally burdensome to require all members to opt-in. [Case shows how class actions must ensure members are given proper notice and right to appear or opt-out when appropriate. ]
Rule 23(b)(3) Analysis
Four Exhaustive Factors i. Class members' interest in proceeding with separate actions. If individual claims are for sizeable amounts, each member may want to litigate separately. If smaller, than more viable to litigate together as a class. ii. Extent and nature of any pending litigation involving the class members. If other individual or class suits are already in the process, may not be economical to certify class action. Or, if majority if members opt-out. iii. Desirability of concentrating the litigation in a selected forum. Given location of evidence and witnesses, may be more concenient to have it in a certain forum. iv. MOST IMPORTANT Manageability: difficulties that would be encountered in managing the suit as a class [Ex: Problems in calculating damages, serious problems in identifying/contacting members to give notice] Also Requires Superiority and Predominance.
Incidental Damages
Key issue: Only incidental monetary relief can be granted under 23b(1) or 23b(2). Incidental Equitable damages that automatically come from declaration of a party's liability. Do not require more hearings or looking into individual cases Ex: Statutory damages, debt collection agency pretends to be part of government, has to pay class members $500 each pursuant to statutory damage rule. Ex: Faulty iphone battery, Apple has to pay everyone $500. Court's rational for why palintiffs could not get backpay as a 23(B)(2) class. [Walmart v. Dukes, Part II].
Rule Analysis - Rule 23(b) [Overview]
Once 1-5 of 23(a) is satisfied, need to satisfy at least 1-3 below. 1-2 are for equitable relief, 3 is for monetary damages. 23b(1)-(2) court has discretion to determine whether class members should be given a chance to opt-out. 12b(3) requires option to opt-out.
Rule Analysis - Rule 23(b)(2)
Party seeking class certification should show how wrongful conduct is homogeneous and how a remedy such as specific performance or a declaratory judgment would benefit whole class.
Rule 23(a) - Black Letter
Prerequisites: One or more members of a class may sue or be sued as representatives parties on behalf of all members only if: 1. The class is so numerous that joinder of all members is impracticable; [Numerosity] 2. There are questions of law or fact common to the class; [commonality] 3. The claims or defenses of the representative parties are typical of the claims or defenses of the class; and [typicality] 4. The representative parties will fairly and adequately protect the interests of the class. [adequacy of representation]
Hansberry v. Lee (1940)
Rule: Sellers in prior case wanted to enforce covenant, sellers [people who sold property to blacks] in this case did not want to enforce covenant. Thus, they were not part of same class of sellers in prior case - conflicting interests, so violation of DP to bind seller in this case to ruling in prior case. Conflicting interest like in Mullane. Shows how fro adequacy of representation in 23(a), representatives of class should not have interests that conflict with other members.
Settlement Classes
Settlement classes seek class certification only for the purposes of getting a judgment settlement from the court. Settlement classes must be held to standards of 23(a) and 23(b), and abide by 23(e). -This class can apply to all 3 types of 23b. Although court does allow settlement class to qualify as class action, court believes settlement classes require more caution-- Amchem case as described in Hanlon v. Chrysler. Require more caution because in settlement classes, defendant is also want class certification, so there will be no other party to flush out the issues. In certifying settlement classes, courts should be cautious of conflicting interests of attorneys -- Ex: In Amchem case, as described in Hanlon v. Chrysler, lawyers represented both future and present plaintiff claims against asbestos manufacturers. Present plaintiffs had clear interest in settling to maximize money, future plaintiffs had strong interests in preserving funds for future claims.
Rule 23(c) - Notice
Since monetary damages are involved, in 23(b)(3) class members must be given notice and chance to opt-out For 23(b)(3), court must make sure class members are provided with "the best notice that is practicable under the circumstances, including notice to all individual members who can be identified through reasonable efforts. -"Notice can be provided through US mail, electronic means, or other appropriate means" In b1 and b2, if injunctive relief or specific performance, benefits everyone, so notice not as important. With money damages, person might be bound by 23b3 judgement and precluded from seeking more damages of their own Court had discretion whether to provide notice for class members in 23b(1) and 23b(2) actions: -To determine whether to provide notice, court looks to Mullane Factors: --Are members easy to identify? --Will notice to members be expensive or cost-effective? --Do members have vested interest in settlement? Will they in any way be harmed by judgment? Party seeking class certification must pay for notice - if he can't, too bad, no 23b3 status for him
Rule Analysis - Rule 23(a) [Typicality]
The claims or defenses of the representative parties are typical of the claims or defenses of the class [representatives must be "typical member" of class]. Claim arises from same event or practice or conduct, same legal theory Each class member makes similar legal arguments to prove defendant's liability. When it is alleged that the same unlawful conduct was directed at or affected both the named plaintiff and the class sought to be represented, the typicality requirement is usually met irrespective of minor variations in the fact patterns underlying individual claims. [Robidoux case]
Rule 23(b)(3) - Black Letter
The court finds that the questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy. The matters pertinent to these findings include: a. The class members' interests in individually controlling the prosecution or defense of separate actions; b. The extent and nature of any litigation concerning the controversy already begun by or against class members; c. The desirability or undesirability of concentrating the litigation of the claims in a particular forum; and d. The likely difficulties in managing a class action.
Rule 23(b)(2) - Black Letter
The party opposing the class has acted or refused to act on grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole; or
Rule Analysis - Rule 23(a) [Adequacy of Representation]
The representative parties must fairly and adequately protect the interests of the class The representative cannot have antagonistic or conflicting claims with other members of the class The representative must have sufficient interest in the outcome to ensure vigorous advocacy Counsel must be competent, experienced, qualified, and generally able to conduct the proposed litigation vigorously - This part is now part of Rule 23(g).
Rule Analysis - Rule 23(a) [Commonality] Part 2 - Modern Requirement
Walmart v. Dukes Scalia sets higher standard for commonality, common question must have common answer, commonality requires plaintiffs suffered same injury, not just same violation of law. Ginsberg decent/concurring: Scalia elevated standard of 23a with higher standard of 23b3. "One significant issue common to the class may be sufficient to warrant certification."
Rule 8(e): Construing Pleadings.
i. "Construing Pleadings: Pleadings must be construed to do justice" Gives court authority to create class action subclasses and alter complaint to determine what type of class action 23(b)1-3 it should be. Court has authority to read/adjust pleadings for what they really are.
Rule 23(e) - Settlements
i. "The claims, issues, or defenses of a certified class - or a class proposed to be certified for purposes of settlement - may be settled, voluntarily dismissed, or compromised only with the court's approval. The following procedures apply to a proposed settlement, voluntary dismissal, or compromise:" (1) If a proposal, such as a settlement agreement, would bind class members, the court may approve it only after a hearing and only upon finding that the settlement is fair, reasonable, and adequate, court takes into consideration a. Whether the class representatives and class counsel adequetly represented the class b. The proposal was negotiated at arms length c. Relief provided for class is adequate d. Proposal treats class members equitably relative to each other (2) If the proposal require court approval under 23(e), then any class member may object. (3) If a settlement is proposed for a class that was already certified as 23(b)(3), court may give class members another opportunity to opt out.
Class Actions: Concept
i. Individuals with common interests join together in a law suit as a certified class. Once certified as a class, judgment is rendered binding on all class members, except those who may have exercised a right to opt out of the class where such an option is available. ii. Burden: Burden of proof to get class certification is on party seeking certification. Party seeking class certification must do more than be detailed in complaint, must provide evidence such as documents, at start of suit.
