Class Actions Flashcards
(10 cards)
What is a class action?
A class action is a type of representative lawsuit in which one or more named plaintiffs litigate on behalf of a larger class of similarly situated individuals. The outcome of the case can bind all absent class members, even those who may not be aware of the litigation.
What did Hansberry v. Lee establish regarding whether a class action decision is binding on a party of a future case?
Due Process in Class Actions – A judgment cannot bind absent parties unless their interests were adequately represented.
What are the four requirements for class actions set forth in Rule 23(a)?
Rule 23(a): Basic Requirements for a Class Action
A case can proceed as a class action only if it meets these four essential criteria:
a) Numerosity – The class is so large that individual lawsuits are impractical.
b) Commonality – The case involves common legal or factual issues shared by all class members.
c) Typicality – The named plaintiff’s claims are typical of the class.
d) Adequacy of Representation – The plaintiff and their attorney will fairly represent the class’s interests.
What are the three types of class actions defined by Rule 23(b)?
Rule 23(b): Types of Class Actions
If a case satisfies Rule 23(a), it must also fit into one of three categories under Rule 23(b):
23(b)(1) – “Limited Fund” or “Incompatible Standards” Cases
} Used when separate lawsuits would create inconsistent obligations or deplete limited resources.
23(b)(2) – Injunctive or Declaratory Relief Cases
} Used when the defendant’s actions affect the whole class, such as civil rights cases.
23(b)(3) – “Damages” Class Actions
} Used for cases seeking monetary damages where common issues predominate over individual issues.
} Requires notice to class members and an opt-out option.
The four primary class action procedures set forth in Rules 23(c)-(h):
These sections establish procedural safeguards to ensure fairness:
◊ Class Certification – Courts must formally certify that a case meets class action requirements.
◊ Notice to Absent Class Members – Required in some cases, particularly Rule 23(b)(3) cases.
◊ Judicial Review of Settlements – Courts must approve settlements to ensure they are fair, reasonable, and adequate.
◊ Attorney Fees Review – Courts oversee fee requests to prevent excessive lawyer compensation.
What are the rules for the notice requirement for class actions?
Rule 23(c)(2) requires individual notice to all identifiable class members in (b)(3) (damages) class actions.
Notice must:
○ Be the best practicable under the circumstances
○ Use plain, easily understood language
○ Inform class members of:
§ Their right to opt out
§ Their inclusion unless excluded
§ Their right to retain separate counsel
Notice isn’t required in (b)(1) and (b)(2) actions unless due process or Rule 23(d)/(e) demands it.
What three major class issues does the Court address in Wal-Mart v. Dukes?
1) The standard of proof for class certification.
2) The meaning of a “common question” under Rule 23(a)(2).
3) The permissibility of monetary relief in Rule 23(b)(2) class actions.
Certification Standard
* Plaintiffs must affirmatively prove that Rule 23’s elements are met with facts, not just allegations.
* Courts can—and often must—probe into factual and merits-related issues when evaluating class certification.
Commonality Requirement (Rule 23(a)(2))
A common question must be central to the validity of all claims and capable of resolution in one stroke. Critics argue this decision heightens the commonality bar and blurs Rule 23(a)(2) with 23(b)(3)’s predominance test.
Can (b)(2) Classes Ever Include Monetary Relief?
Pre-Wal-Mart, some courts allowed limited backpay in (b)(2) classes.
Wal-Mart rejects that if monetary relief is individualized.
However, mechanical or formulaic relief (e.g., pension cases where damages can be uniformly calculated) may still be allowed under 23(b)(2).
Requirements for Damages Class Actions Under Rule 23(b)(3):
- Predominance Requirement
- More demanding than the commonality requirement in 23(a)(2).
- Found when class treatment would:
○ Save time and effort
○ Promote consistency
○ Not sacrifice fairness or manageability - Easiest cases for predominance:
○ Claims based on standardized conduct (e.g., securities fraud, consumer deception, antitrust). - Challenging cases:
○ Individualized issues on liability or damages
○ Variation in state laws for nationwide classes
- Superiority Requirement
Factors courts consider:
* Do plaintiffs have enough incentive to sue individually?
* Are other cases already pending?
* Is the forum appropriate?
* Will the class action be manageable?
Class actions are most “superior” when:
* Individual claims are too small to litigate alone (e.g., Chandler—$100 claims)
* A uniform legal issue applies to many claimants
Notice in (b)(3) Class Actions:
Notice Requirement in Rule 23(b)(3) Class Actions
* Rule 23(c)(2) requires individual notice to all identifiable class members in (b)(3) (damages) class actions.
* Notice must:
○ Be the best practicable under the circumstances
○ Use plain, easily understood language
○ Inform class members of:
§ Their right to opt out
§ Their inclusion unless excluded
§ Their right to retain separate counsel
* Notice isn’t required in (b)(1) and (b)(2) actions unless due process or Rule 23(d)/(e) demands it.
Can class action suits be settled without judicial review?
No.
Under Rule 23(e) of the Federal Rules of Civil Procedure, a class action may only be settled with court approval, which must be based on a finding that the settlement is “fair, reasonable, and adequate.” Class members must be given notice and an opportunity to object. In Rule 23(b)(3) cases, courts can require a second chance to opt out.
