Class Action Lawsuits: A Primer
Class action lawsuits provide an important vehicle by which similarly-situated claimants – sometimes numbering in the thousands – can litigate their causes of action in a single judicial forum. As such, class action lawsuits promote judicial economy, efficiency in the adjudicatory process, and fairness to the participating claimants. An attorney striving to represent a class of individuals suffering similar harms must, under Federal Rule of Civil Procedure 23, satisfy several stringent requirements before a court will certify and thus approve the litigation as a class action lawsuit.
A class action lawsuit is brought by a class representative and is brought on behalf of many people allegedly injured by malfeasance by a single defendant (or small number of defendants).
To successfully certify a class an individual must satisfy four prerequisites under Rule 23(a):
(3) typicality; and
(4) adequacy of representation
The United States Supreme Court has held that a plaintiff must prove, not merely plead, each requirement.[i] Consequently, courts perform an exacting analysis of the pleadings to determine if each requirement is met. Importantly, however, in so doing, courts may need not (and usually cannot, at this stage) decide the substantive claims of the class on the merits, but instead may only conduct inquiries to determine if the certification requirements are satisfied.[ii]
The numerosity requirement does not focus on the specific number of individuals in a class, although courts have typically held that classes of less than twenty members are insufficiently numerous.[iii] Rather, the courts evaluate whether the joinder of people affected in a regular lawsuit would be impractical. If not, there’s no point in bothering with a class action. The lawsuit should be brought as a regular civil action. In conducting this inquiry, courts consider, among other things, the difficulty of locating the class members, the size and complexity of the individual claims, the ability of the affected plaintiffs to each commence a separate action, and the types of claims and relief sought.[iv] For example, 46 people on a local bus that was in an accident who all live locally probably don’t need a class action to go forward with a lawsuit. They can just sue individually or in one large (but not class action) civil action. However, 40 victims of a false advertising campaign scattered around the country and whose injuries are hard to measure may be more likely to warrant class action status.
The claims of the class members must involve common questions of law or fact. Courts do not require that all questions of law or fact are common to the class, and the presence of modest factual differences among the class members will not necessarily defeat commonality.[v] Instead, an individual representing the class members must demonstrate that there exists at least one question of law or fact that is common to the class.[vi]
The individual must plead – and prove – commonality with the requisite degree of specificity. Generalized allegations – such as a broad assertion that the members have been victims of “fraud” without specifically identifying, describing and defining a specific common fraud that the class members were all victims of, will fail the commonality requirement.[vii] The class members must demonstrate not only that they have common claims, but that the manner in which these claims arose, such as allegedly fraudulent behavior of a corporate entity or negligent misrepresentations of a manufacturer, are common as well.[viii] If the injuries suffered by the plaintiffs are so different that they cannot be described with this level of commonality, it would be impractical to handle all of their claims in a single lawsuit.
The typicality requirement does not focus primarily on the class members, but on whether the claims of the class representative, or named plaintiff, are typical of those in the class. For example, the United States Supreme Court held that the named plaintiff must have the “same interest(s)” and allege the “same injury” as the class members.[ix]
To satisfy this standard, the class representative must demonstrate that there is a sufficient connection between the representative’s claims and those of the class members.[x] More specifically, the representative must prove that the class representative’s claims share “the same essential characteristics as those of the putative class.”[xi] Provided that such claims “arise from a similar course of conduct and share the same legal theory, factual differences will not defeat typicality.”[xii]
Finally, the class representative must demonstrate that he will fairly and adequately represent the interests of the absent class members. In making this determination, courts will focus on whether the interests of the class representative and class members conflict, whether the injuries allegedly suffered by the class representative are similar to the absent class members, whether there are any issues upon which the class representative and absent class members disagree and whether the attorneys hired to handle the class action have the capability to represent the class skillfully and competently.[xiii]
Once a class is certified, Rule 23(b) provides a class representative must demonstrate one of the following additional reasons that the action should be brought as a class action rather than by each plaintiff individually:
(1) litigating separate actions would risk inconsistent adjudications and would thus establish incompatible standards of conduct for the defendant or would, as a practical matter, resolve the interests of other class members;
(2) the defendants have acted, or refused to act, in a manner that is generally applicable to the class; and
(3) the common questions of law or fact predominate over an individual class member’s claims and a class action lawsuit is superior to other methods of adjudication.
Let’s look at each of these in more detail.
Litigating Separate Actions Would Risk Inconsistent Adjudications that Impose Incompatible Standards of Conduct
When construing Rule 23(b)(1), an individual should consult the advisory committee's notes, which explain as follows:
One person may have rights against, or be under duties towards, 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.[xiv]
Essentially, Rule 23(b)(1) strives to safeguard absent class members from litigation that could negatively affect their ability to safeguard their interests.
The Defendants Have Acted, or Refused to Act, In a Manner Generally Applicable to the Class
Under Rule 23(b)(2), the class representative must demonstrate that: (a) the defendant acted in a manner that is generally applicable to the class; (b) that the class members have standing to seek the type of relief requested; and (c) that a single remedy, such as declaratory or injunctive relief, would benefit each member of the class. Put differently, the class representative may not seek individualized legal remedies for each member and this includes a prohibition on class members seeking individualized monetary damages.
Common Questions of Law or Fact Predominate Over the Individual Class Members' Claims
Under Rule 23(b)(3), the class representative must demonstrate that common questions of law or fact predominate over the individual claims of class members, and that a class action lawsuit is a superior method to fairly and efficiently resolve the legal issues.
Effects of the Class Action
Once the class action is certified and is moving forward, members of the class must be notified of the existence of the class action and explained their rights. This is typically done by mailed document that announces the pending class action and explains the rights of the members of the class to them.
Each member of the class has the following options:
1. Do nothing, and remain part of the class.
2. Opt out, and choose to not go forward as part of the class.
3. Retain her own attorney to represent her in the class action proceeding.
If the class member does nothing and remains part of the class, then he or she will share any judgment or settlement that the class-action lawsuit eventually earns. However, that class member is not able to bring a separate lawsuit based on the same facts. In other words, the class member is bound by whatever result the class action brings.
If the class member opts out, she does not share in any judgment or settlement and will receive no benefit from the class-action lawsuit, but may bring a separate cause of action based on these facts. The class member would do this when he feels that he has a strong case and will likely win more by bringing his own lawsuit than would be his share under the class-action judgment or settlement.
The third option allows the class member to retain her status as a class member, but to have her own attorney represent her interests to ensure that the class-action proceeds in a manner that is fair and advantageous to the class.
[i] . See Walmart Stores, Inc. v. Dukes, 564 U.S. 338, 350 (2011).
[ii] . See Amgen, Inc., v. Connecticut Retirement Plans and Trust Funds, 133 S. Ct. 1184 (2012).
[iii] . See, e.g., Hayes v. Wal-Mart Stores, Inc., 725 F.3d 349 (3d Cir. 2013).
[iv] . See, e.g., Charles Wright, et al., Federal Practice and Procedure, Section 1762 (3d ed. 2005 and Supp. 2010).
[v] . See, e.g., Walmart Stores, 564 U.S. 338, 349-50; D.G., Ex. Rel. Stricklin v. Devaughn, 594 F.3d 1188, 1195 (10th Cir. 2010).
[vi] . See id.
[vii] . See id. at 350.
[viii] . See id. at 352.
[ix] . General Telephone Company of the Southwest v. Falcon, 457 U.S. 147, 156 (1982); see also, Wal-Mart, Inc., 564 U.S. at 349 (internal citation omitted).
[x] . See, e.g., Prado-Steiman v. Bush, 221 F.3d 1266, 1278-79 (11th Cir. 2000).
[xi] . Stirman v. Exxon Corp., 280 F.3d 554, 562 (5th Cir. 2002).
[xii] . Stirman, 280 F.3d at 562.
[xiii] . See, e.g., General Tel. Co. of the Southwest, 457 U.S. at 157, n.13.
[xiv] . Fed. R. Civ. P. 23(b)(1), Advisory Committee's Notes.