Class Actions

Question 1

Class Action Generally

Answer 1

Representative(s) (“Rep”) sues on behalf of group

• Under Rule 23, an individual or small group can represent a larger group (class) sharing a common interest in a lawsuit
• Usually involves Ps as class
  
  • but, Ds can form class action
• Only class Reps must satisfy requirements re PJ, SMJ, and Venue

Analysis

• Four Prereqs
  
  • (1) Numerosity
  • (2) Commonality
  • (3) Typicality
  • (4) Adequacy (of Reps)
• Types — must meet reqa for one of types
  
  • (1) Anti-Prejudice Device
  • (2) Injunction or Declaratory Judgment
  • (3) Damages
• Class Action Certification, Judgment, & Settlement

Question 2

Class Action

Four Prerequisites

Answer 2

(1) Numerosity

• Joinder is Impracticable — because too many class members (class size so numerous)
• No exact threshold as to class size requirement
  
  • depends on context of case and claims

(2) Commonality

• There must exist issues of law or fact common to all members of class

(3) Typicality

• Claims or defenses of the class Reps are typical of those of the class

(4) Adequacy (of Reps)

• Class Reps will fairly and adequately protect interests of the entire class
• Reps must not have conflicts of interest with class members
• Class counsel must be competent

Question 3

Types of Class Actions

Answer 3

Must meet the requirements for one of the types

• (1) Anti-Prejudice Device
• (2) Injunction or Declaratory Judgment
• (3) Damages

(1) Anti-Prejudice Device

• Class treatment necessary to avoid harm (prejudice) either to class members or non-class party
• Used where — actions by or against class members — would create a risk of
  
  • (a) inconsistent decisions, or
  • (b) impairment of class interests
• Ex — many people have claims to a limited fund of money. If they sue individually, the fund will be depleted before all claimants get to court. That would leave those later claimants with nothing. To avoid this harm, a class would allow everybody to recover at least a portion of their claim.
• Rare on MBE

(2) Injunction or Declaratory Judgment

• Class seeks an injunction or declaratory judgment because D treated the class members alike
• Examples — employment discrim, civil rights cases
• Generally won’t be allowed to recover damages in this type of class action

(3) Damages

• Most common
• Used where primary relief sought is damages
• Two Requirements:
  
  • (i) Predominance — common questions of law or fact predominate over individual questions
  • (ii) Superiority — class action is superior to other procedures to resolve the dispute
• Examples
  
  • Mass Torts, Large Accidents
  • Ex — bus crash injures 80 people, there will be individual questions about damages, but the common questions (e.g., negligence of driver) may predominate. The class action may be superior to 80 separate suits.
• Opt Out & Notification Requirements
  
  • Class members have Opt-Out Rights
    
    • Judgment only binds class members who do not opt-out
  • Notification Required — only in this type
    
    • All reasonably identifiable class members must be notified of pendency of the action, including opt-out rights and right to appear via separate counsel
    • Rep pays for notice

Question 4

PJ

Class Actions

Answer 4

Absent class members are not required to meet minimum contacts requirements

PJ DP requirements satisfied by

• reasonable & adequate notice to class members
• opportunity to opt out (if applicable), and
• adequate representation

Question 5

SMJ

Class Actions

Answer 5

FQ Jxd

• same rules as in individual cases

Diversity Jxd

• In determining, court looks only to class Reps
• Diversity reqs satisfied if:
  
  • (1) Citizenship
    
    • Reps are diverse from alI opposing parties
  • (2) Amount in Controversy
    
    • Reps’ claims exceed $75k

**_Class Action Fairness Act (CAFA)_**
Separate means of obtaining SMJ in class action

• Jxd exists if:
  
  • (1) Any class member is diverse of any opposing party, and
  • (2) Aggregated claims of the class exceed $5 million
• Doesn’t apply to:
  
  • Class actions with fewer than 100 class members
  • SH claims against Corp management
  • Certain state securities law fraud claims

Question 6

Class Action

Certification, Judgment, & Settlement

Answer 6

(1) Certification

• Rep’s complaint will say “class action” — but case is not a class action until — court grants motion to certify class action
• Court must determine at an early practicable time whether to allow the case to proceed as a class action (i.e., certify class)

If a class is certified — court must:

• (a) Define
  
  • (i) the Class
    
    • i.e., who can be a class member
  • (ii) the Class – Claims, Issues, & Defenses
• (b) Appoint Class Counsel
  
  • class counsel (like rep) must fairly and adequately represent interests of the class as a whole

Appeal of Denial of Motion

• Timing
  
  • Certification can be appealed via interlocutory appeal before final judgment on the merits
  • District Court’s order granting or denying certification of a class action can be appealed within 14 days of entry of the order.
• Court of Appeals has complete discretion in deciding whether to hear the appeal.
  
  • If it decides to hear the appeal, proceedings are not stayed at the district court
    
    • — unless the District / Appeals court so orders.

(2) Judgment (Who is Bound)

• Binding as to all absent class members
  
  • — except those that opt out of Type (3) Damages class
  • No right to opt out of
    
    • (1) Anti-Prejudice, or
    • (2) Injunction or Declaratory Judgment

(3) Settlement & Dismissal
Requirements

• Applying to All Three Types
  
  • Court must approve any settlement reached between class Reps and opposing party ​
    
    • Settlement must be fair, reasonable, and adequate
  • Notice
    
    • Court wilI seek feedback from absent class members in deciding whether to approve or reject the settlement / dismissal
• `For Type (3) Damages class
  
  • Court may require a second opportunity for class members to opt out before approving the settlement
    
    • would reject settlement if Reps don’t / opportunity is not in settlement agreement

Question 7

Class Action

Certification

Answer 7

• Rep’s complaint will say “class action” — but case is not a class action until — court grants motion to certify class action
• Court must determine at an early practicable time whether to allow the case to proceed as a class action (i.e., certify class)

If a Class is Certified — court must:

(a) Define

• (i) the Class
  
  • i.e., who can be a class member
• (ii) the Class – Claims, Issues, & Defenses

(b) Appoint Class Counsel
* class counsel (like rep) must fairly and adequately represent interests of the class as a whole

Appeal of Denial of Motion

• Timing
  
  • Certification can be appealed via interlocutory appeal before final judgment on the merits
  • District Court’s order granting or denying certification of a class action can be appealed within 14 days of entry of the order.
• Court of Appeals has complete discretion in deciding whether to hear the appeal.
  
  • If it decides to hear the appeal, proceedings are not stayed at the district court
    
    • — unless the District / Appeals court so orders.