Aggregation Through Class Action - Module 2 of 5

Aggregation Through Class Action

The Nature of a Class Action

In the federal courts, there are two methods to aggregate widespread harms from common sources: class action and multidistrict litigation.”[1] The primary difference between the two is that once a class action is certified consolidating a large number of claims, it’s expected to last all the way through final resolution of the case.  If there is a trial, the trial will take place within the class action proceeding and will bind all the members of the class.[2]  On the other hand, an MDL proceeding consolidates and transfers many claims to one court only for pretrial proceedings, like discovery. 

We will begin by focusing on the older, perhap better known method of consolidation, the class action.   Not all class actions are mass tort cases. Antitrust cases and securities litigation often are brought as class actions.  Most class actions, though, are mass tort cases.  In fact, over one-quarter of all actions currently pending in the federal courts are mass tort actions.[3]

             Federal Rule of Civil Procedure 23, one of the longer and more complex federal rules, governs class actions.  In a class action, one person, or a small group of people who share similar claims with a large group of others, acts as the representative of the group in a collective court proceeding.  This group is called the class.  Once the class is formed, the class representative represents the class all the way through trial or settlement.  The results that the representative plaintiffs obtain bind all other members of the class. For a mass tort class action, someone who was hurt by the product in question would act as a representative of all those similarly hurt. 

The key issues that are usually determinative of class actions are whether the group’s claims are similar enough that it is proper to treat them as the same claim and class and whether the class representative can be shown to be a good representative of the class’s interests, and not just her own interests. 

Initiating a Class Action

            To start a class action, a lawyer representing an individual plaintiff files a complaint for the named clients, like any tort case.  However, the complaint must include allegations for the representatives named in the complaint and allegations that apply to a large class, including all people with similar claims.  The client Is designated as the representative for the entire class. The complaint is then referred to as the “putative class complaint,” and the proposed class as the “putative class.”  However, merely alleging that there is a class does not create one.  The court must certify the existence of the class.[4]  If the court denies certification, then the case can proceed as a normal complaint for the named plaintiffs, but it will not be a class action.

            The attorney seeking to represent the class must move for class certification “at an early practicable time.”[5] The motion should provide a definition of the class and any relevant claims, issues and defenses, and should explain why the class, as proposed, meets the criteria for being a class.  The motion will propose the class counsel who will represent the class. If the motion is granted by the court, the court will issue an order defining the class, listing the class issues and identifying the class counsel.  That court may later amend the order during the proceeding to add or subtract issues, to change the scope and definition of the class or to change the identity of the counsel.[6]

            The issuance of the order also means all people who fit the class definition are part of the class and are bound by the result of the litigation, no matter what that result might be.  Any dispositive action, from summary judgment to settlement or verdict, ends all the class members’ claims.  Therefore, it is extremely important to give them notice of the pending class action suit. The court will ensure the notice takes place, using “the best notice that is practicable.”[7] This should generally include individual notice to all people in the class who can be identified through reasonable effort (usually by mail). The court will require the plaintiffs’ class counsel to identify individual class members as specifically as possible, and then give notice that the court directs be given.[8]

            The notice must explain the nature of the action and the definition of who is in the class. It also must include the class claims, issues and possible defenses.  It also must explain that a class member may enter an individual appearance through her own attorney if the member so desires.  Finally, the notice must explain that the result of the case will bind every member unless she requests to be excluded from the class.  The notice should further explain the deadline for requesting exclusion, and the procedure for making that request (usually called the “opt out”).[9]

Requirements for a Class

            There are four fundamental requirements that all proposed classes must meet. These are often referred to as the requirements of numerosity, commonality, typicality, and adequacy of representation.[10]  “Numerosity” means the class must be so large that it would not be practical to join them all individually.[11] Mass torts, by definition, involve a very large number of claims, so they almost always have numerosity.   “Commonality” means the members of the class must share common questions of law or fact.[12] Mass torts typically arise from a common factual circumstance, in that a single product (such as a pharmaceutical) or single act (like the explosion of an offshore drilling rig), is alleged to have caused factually similar harms to all who have those claims. “Typicality” means the proposed representative of the class must have claims typical of the class. For example, if a plan crash caused 200 deaths and had 4 survivors, it would be inappropriate to have a survivor represent the class, as his claim is atypical of the class. “Adequacy of representation” means the proposed representative of the class must be able to fairly and adequately represent and protect the interests of the entire class.[13]  These last two requirements focus on how well the lawyers who bring the claim and their clients, the named plaintiffs, will serve the role of class representative.

Passing the four tests, however, is just the first step. The court must next find that there applies a reason that the case should not be separated out into individual lawsuits. Rule 23 lists three such possible reasons:

(1)   Prosecuting the actions separately would result in inconsistency of standards applied or that the end of the first lawsuits might bar or impede later ones (such as by bankrupting the defendants or establishing judicial precedent that would bar the later actions).

(2)   Final injunctive or declaratory relief (which means the court ordering the defendant to engage or not engage in certain behavior) would satisfy the claims of all the people in the class (such as when stopping a merger on antitrust grounds would satisfy the needs of all aggrieved parties challenging the merger).

(3)   Common questions of law predominate over any individual questions, and that a class action is superior to other available methods for efficiently adjudicating the controversy.[14]

Mass torts that are approved for class action status typically fit into category three. In particular, this “predominance” test is an extension of one of the four fundamental tests, the “commonality” test.  The commonality test requires that there be important common issues of fact and law, but that test does not necessarily mean these issues are the most important issues affecting the case.  The “predominance” test, however, requires that these common issues are much more significant to the resolution of the case than any individual claims.  It is on this “predominance” that mass tort class action status usually turns. 

Individual injuries arising from a product used across the nation over a lengthy period may vary greatly.  Different plaintiffs will have been exposed to the product for longer or shorter periods of time and will have been exposed to different quantities of the product.  For example, some asbestos plaintiffs contracted asbestosis while others had mesothelioma, and, of course, they were exposed to different products for different periods of time. In the 1990s, thousands of such disparate asbestos claims were assigned as a group to one federal judge, but they were not formally aggregated in any way.  Lawyers who had formed an informal committee for all the plaintiffs, however, decided to seek a class certification, so the court could approve a global settlement of all the claims that bound the plaintiffs. 

However, when the Supreme Court examined the class, it struck down its class action status.  The Court noted that the members of the class were exposed to different types of asbestos-containing products, in different ways, over different periods and for different amounts of time, and the harms they suffered varied widely.  Therefore, in a 1997 decision called Amchem Products., Inc. v. Windsor, the Supreme Court found that common issues did not predominate and there could be no class.[15] Two years later, the Supreme Court reaffirmed that decision in Ortiz v. Fiberboard Corp.[16]

Limited Classes

            After these two decisions, it appeared mass torts classes would have difficulty surviving appellate review, and, in fact, courts became very reluctant to certify classes in mass tort actions. However, there is another part of the class action procedure that courts have begun to use to relax the strict “predominance” requirement. When a single enormous class falls apart due to lack of predominance of any one set of facts or issues, the class may be divided into subclasses and each may be set up to deal with only certain aspects of a claim.[17]   

Dividing the classes makes it possible to use class action procedures to resolve some common issues while leaving others for individual case resolution.  This flexibility has allowed courts to begin to use class actions more frequently to help resolve mass tort actions. Using these rules, courts have created “issue class actions” that include only certain claims rather than seeking to adjudicate all claims. In an issue class action, the representative parties will litigate certain issues on behalf of the class while the court will set aside those elements that require individualized adjudication for litigation elsewhere.

            Subclasses may, for example, be created to distinguish between people with measurable harm and those who have not yet manifested any injury, or one class may consist of those suffering one type of adverse effect from exposure to a product, such as a specific type of cancer.  Other subclasses could be divided based on which law governs the claim. One may include people whose claims are governed by the California tort law standards and another subclass may include those whose actions are governed by Nevada law, etc. Another type of limited class might be an “issues” class that addresses only causation, such as whether exposure to a particular product causes a certain kind of harm, but that sets aside for individual resolution questions of damages, or how badly particular members were injured.

            One particular type of limited class, the “settlement class,” has been particularly important in mass tort litigation.  The federal rule governing class actions explicitly refers to “a class proposed to be certified for purposes of settlement.”[18]  The settlement class is certified simply to approve a previously negotiated settlement, with no trial contemplated at all.  In other words, this kind of limited class can be brought only to settle cases en masse.  Courts using settlement classes have revived the use of class actions to handle mass torts even when the Supreme Court’s decisions in Amchem and Ortiz made it less likely that the underlying cases would have been approved for class action status.

These limited class actions, however, cannot handle all of the aspects of a mass tort.  For instance, a settlement class cannot arise until the mass tort action has been in existence for a while and progressed to the point where a mass settlement is possible.  The parties may not be in a position to move a court to certify a class until after a settlement has been negotiated that would address all the claims in the mass tort proceeding. A settlement cannot be negotiated before both sides of the dispute have some information about the nature of the claims and the extent of the injuries. Therefore, the settlement class only will be certified after many claims have been filed and the cases have proceeded long enough to reach a stage where a settlement can be negotiated.  That means a procedure other than a class action must be used to manage these mass tort cases before they reach the point of becoming a class.

For settlement classes to work, there must be some way to manage the mass tort claims that thousands of different people file in the period before the class can be certified.  There also must be some way to coordinate cases during discovery and to identify some lead group of plaintiffs’ lawyers who can negotiate the settlement that is the reason the class is certified. Similarly, in a limited issue class action, if some common issues are handled through class procedures, there must be some way to manage the remainder of the issues that must be handled individually. That procedure is a multidistrict litigation proceeding.[19]

Nearly all mass tort cases being handled in federal courts are brought as individual claims and then consolidated for pretrial proceedings in an MDL proceeding.  Even when class action procedures are used to resolve a mass tort, that same tort also will be handled at least in part with an MDL proceeding.  Therefore, we will next turn to MDL proceedings and how they work.