Class Actions
legal-advice

A Class Action provides a means whereby large numbers of claimants may have their causes involving common questions of fact or law adjudicated in a unitary proceeding. Since all claimants cannot be named parties in the lawsuit, the action is by its very nature a representative proceeding. The named class plaintiff representatives in addition to prosecuting their own claims serve on behalf of and pursue claims belonging to the absent class members. Further, the attorneys and named plaintiffs representing the ostensible plaintiff class assume fiduciary responsibilities to protect the interests of the absent class members.

Federal Class Actions

In the United States federal courts, class actions are governed by Rule 23 of the Federal Rules of Civil Procedure.

 

Class Action Lawsuits may be brought in federal court if the claim arises under Federal Law, or if any member of the potential plaintiff class and the defendant are from different states. Nationwide plaintiff classes are possible, but such suits must have a commonality of issues across state lines. This may be difficult as the civil law in the various states has significant differences and thus each state’s set of claims may have to be handled separately or through the device of multi-district litigation (MDL). It is also possible to bring class action lawsuits under state law, and in some cases the court may extend its jurisdiction to all the members of the class, including out of state (or even internationally) as the key element is the jurisdiction that the court has over the defendant.

 

Typically, federal courts are thought to be more favorable for defendants and state courts more favorable for plaintiffs. Most class action cases are filed initially in state court. The defendant will frequently try to remove the case to federal court. The Class Action Fairness Act of 2005 increases defendants’ ability to remove cases to federal court.

 

The procedure for filing a class action is to file suit with one or several named plaintiffs on behalf of a putative class. The putative class must consist of a group of individuals or business entities that have suffered a common wrong. Usually, these kinds of cases are connected to some standard action on the part of a business, or some particular product defect or policy that was applied to all potential class members in a uniform manner. After the summons and complaint is filed, the plaintiff usually has to bring a motion (some times at the same time as filing the summons and complaint) to have the class certified. In some jurisdictions class certification may require additional discovery in order to determine if the proposed class is sufficiently cohesive.

 

Upon the motion to certify the class, the defendants may object to whether the issues are appropriately handled as class litigation, to whether the named plaintiffs are sufficiently representative of the class, and to their relationship with the law firm or firms handling the case. The court will also examine the ability of the firm to prosecute the claim for the plaintiffs, and their resources for dealing with class actions; the court may, as due process requires, have complex notices sent, published, or broadcast to the public, in any place where the class members can be found.

As part of this notice procedure, there may have to be several notices, first a notice giving class members the opportunity to opt out of the class, i.e. if individuals wish to proceed with their own litigation they are entitled to do so, only to the extent that they give timely notice to the class counsel or the court that they are opting out. Second, if there is a settlement proposal, the court will usually direct the class counsel to send a settlement notice to all the members of the certified class and all the members of any subclasses (that might have slightly different but uniform claims), informing them of the settlement offer being made by the defendants, and the fact that the named plaintiffs have agreed to accept the settlement. Usually, the court will also state the legal fees being paid to the class counsel as part of the settlement, which may be considerable, making class actions appealing to many plaintiff law firms.

 

In Federal Civil Procedure Law, which has generally been accepted by most states (through adoption of rules paralleling the FRCP), the class action must have certain definite characteristics: (1) the class must be so large as to make individual suits impractical, (2) there must be legal or factual claims in common (3) the claims or defences must be typical of the plaintiffs or defendants, and (4) the representative parties must adequately protect the interests of the class. In many cases, the party seeking certification must also show (5) that common issues between the class and the defendants will predominate the proceedings, as opposed to individual fact-specific conflicts between class members and the defendants and (6) that the class action, instead of individual litigation, is a superior vehicle for resolution of the disputes at hand.

 

State Class Actions

Since 1938, many states have adopted rules similar to the FRCP. However, some states like California have homegrown civil procedure codes which they have been reluctant to abandon. The law of class actions in California developed in a rather chaotic fashion through judicial glosses on vaguely worded statutes (there are four key ones), and has never been cleaned up (in the way that the FRCP cleaned up the thicket of federal procedural law). As a result, there are entire treatises dedicated to the topic. Not every state permits class actions. Virginia, for example, does not provide for any class action vehicle.