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ersonian Principks in Action

Class Actions Improvements Act

Summary
This Act makesseveral revisionsto the basicclassactionstatuteor rule that hasbeenadopted in someform by moststates Rule 23 of theFederalRule of Civil Procedure).For themost (i.e., part,the revisions clarify Ru1.e by makingmoreexplicit key intetpretations therule that 23 of havebeenofferedin recentyearsby federal(assomestate)courts. In particular,theAct tracks Rule23.principallymakingfive changes states that couldadoptin an effort to achieve modest (but significant)improvements their statutes to and/orcourt rulesgoverningthe useofthe class actiondevice: (a) TheAct would authorizeappellate review of trial courtorderscertifying or denying certiticationof proposed classes (trackinga recentsimilar change federalRule23). to (b) TheAct would establish rule limiting the scopeof plaintiff classactionsto residents the a of statein which theclassactionis filed (emulatingthe view of somestatecourtsthat they shoulddevotetheir limited resources primarily to resolvingthe claimsof their own citizens, not thethousands out-of-state of residentsclaimstypically asserted interstate in class actions).
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(c) TheAct would adoptan explicit classwideproof prerequisite classcertification for (embracing prevailingpolicy of federalcourtsto ensure the dueprocess a that rights of unnamed members defendants protectedat trial). class and are (d) TheAct would adda maturity factor to the classcertificationprerequisites (adopting another prevailingpolicy of federalcourtsto ensure classactionsarenot employed that prematurely). (e) Finally,the Act would adda administrative processfactor to theclasscertification prerequisites (codifyingthe federalcourtpolicy arenot needed wherethe allegations asserted within thepurview of a federalor stateregulatoryagency). are In addition,tl-eAct (i) would eliminatedefendant classactions(thatis, instances which a in plaintiff seeks suea classof defendants), would requirethat,thetrial court consider to (ii) whethertheexpense effort requiredto litigate the caseon a classbasisis and justified by the
There is substantialuqifonnity among the statestatutesand statecmtt?t&s that goveti classcertification. Forty stateshave adopted(sometimeswith minor modifications) the current (1966) version of Fed. R. Civ. P. 23. Two states(Mississippi and Virginia) have no formal classaction StaNteS or ruler at all.
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amountof the recoverythat eachclassmemberis likely to obtain(a provisionthathasbeen includedin Michigansclassactionrule); (iii) would codify the federalcourtpolicy that (b)(2) cfassactionsarenot availablewheremonetaryrelief is sought,(iv) would makeclearthatthe appropriate timing for trial courtconsideration classcertificationissues of variesfrom caseto case(trackinga proposed amendment the FederalRulesof Civil Procedure), would require to (v) thata trial court give a written explanation a decisionto certify (or not to certify) a proposed of class, would establish classcertificationmaybe grantedonly wherethereis a full record (vi) that andwherethe proponents profferedclearandconvincingevidence the certification have that prerequisites beensatisfied,(vii) would codify the federalcourt view that thereshouldbe have no presumption favor of classcertification,(viii) would establish rebuttable in a presumption againstthe certificationof classes asserting claimsaboutwhichthe classmembers would haveto proveknowledge, reliance,or causation anindividual basis,(ix) would addlanguage on stressing that classcertificationdoesnot excuse eachclassmembers burdento proveeachelementof his/herclaim; (x) would addspecifications concerning categories informationthat should the of be includedin anynoticessentto the unnamed classmembers; would clarify that the (xi) proponents classcertificationhavethe exclusiveburdenof payingfor any classnotice of (consistent federalCOUR with policy); (xii) would clarify thatthe rule doesnot authorizeissues classactions(cases which proponents to haveout-of-context in seek trials on issues favor that their position,deprivingthejury of the opportunityto judge the whole story); (xiii) would specifybasicprocedures a trial court shouldfollow in reviewinga proposed that classaction settlement; (xiv) would confirm that unnamed and classmembers be subjectto courtmay approved discoveryregardingtheir individual claims. These provisionsmay be implemented a statuteor asa changein staterulesof civil procedure, as asappropriate.If the statehasadopteda statecourtrule governingclassactions,the legislatures ability to change rule maybe limited underthe stateconstitutionor rulesenablingact-type that statute. Theprovisionsof the Act assume the statepresentlyhasadopted R. Civ. P. 23 (or a that Fed. similarrule) asits classactionrule. If the statehasadopted anotherclassactionrule, some adaptation be necessary. may

SuggestedProvisions
[Title, enacting clause, etc.] Section 1:. Title. The following Act shall be known andmay be cited asthe ClassAction

Improvements Act.
Section 2. Revisions to Class Action [Statute/Rule]. [Section/Rule -

of the

1shall

be deletedandreplaced its entirety~with following: in the

2

(a) Prerequisites to a ClassAction. One or moremembers a class of of [nameof state]residents sueasrepresentative may partieson behalfof all members of the classonly if (1) the classis sonumerous joinder of all members impracticable, that is (2) therearequestions law or fact asto which the court or jury could reasonably of reach conclusions findingsapplicabl:to all classmembers, the claimsor defenses the or (3) of representative partiesaretypical of theclaimsor defenses the class,(4) the of representative partieswill fairly andadequately protectthe interests ofthe class,and(5) the classis definedso asto permit the identificationof classmembers beforeanymerits adjudications occur. (b) Class Actions Maintainable. An actionmaybe maintained a as

classactionif theprerequisites subdivision(a) aresatisfied,andin addition: of (I) theprosecution separate of actionsby or against individualmembers the classwould createa risk of of or with (A) inconsistent varyingadjudications respect individualmembers the classwhich would establish to of incompatiblestandards conductfor the party opposingthe class,or of (B) adjudications respect individual with to members theclasswhich would asa practicalmatterbe dispositiveof of the interests theothermembers panicsto the adjudications of not or substantially impairor impedetheir ability to protecttheir interests; or (2) theparty seekingto maintainthe classactiondoes not seekany monetaryrelief andthe party opposingthe classhas actedor refused to acton groundsgenerallyapplicableto the class,therebymakingappropriate final iqjunctiverelief or corresponding declaratory relief with respect the class to asa whole; or (3) the court finds (i) that the questions law or fact as of to which the court or jury could reasonablyreach conclusionsor findings applicableto all classmemberspredominateover any questionsaffecting only individual members, that the evidencelikely to be admittedat trial regarding (ii) the elementsof the claims for which certification is soughtand of the defmses thereto is substantiallythe sameas to all classmembers,and (iii) that a class actionis superiorto otheravailablemethodsfor the fair andefficient adjudication of the controversy. Thematterspertinentto the findings include: (A)the interest of members the classin individually controlling the prosecutionor defense of of separate actions;(B) the extent,nature,andmaturity of any litigation concerning the controversyalreadycommenced or againstmembersof the class; (C) by whetherit is probablethat the amountwhich may be recovered individual class by members will be large enough in relation to the expense and effort of administering actionto justify maintainingthe caseas a classaction; (D) the the desirability or undesirabilityof concentrating litigation of the claims in the the 3 .

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particularforum; (E) the difficulties likely to be encountered the management in of a classaction;and(F) the extentto which the allegationsat issuearesubjectto thejurisdiction of federalor stateregulatoryagencies.
(c) Determfnatioa by Order Whether Class Action to be Maintained; Notice; Judgment.

(1) Whenpracticable afterthe commencement an action of broughtasa classaction,the courtshall,afterhearing,determine order by whetherit is to be so maintained.An orderunderthis subsection bealtered, may amended, withdrawnat anytime beforethe decisionon the merits. or (2) If the courtfinds that the actionshouldbe maintained a as classaction,it shallcertify the actionaccordinglyon the basisof a written decisionsettingforth all reasons theactionmay be so maintained why and describingall evidence supportof the determination. in (3) A court shallnot certify that an actionmaybe maintained asa classactionunless,on thebasisof a full recordon the relevantissues, the proponents proffer clearandconvincingevidence the actioncomplieswith all that requirements suchcertification. Any doubtasto whetherthis burdenhasbeen for met shallbe resolvedin favorofdenying classcertification.Thecourt shall decertifya classactionuponany showingthat an actionhasceased satisfythe to applicable prerequisites maintainingthe caseasa classaction. for (4) Thereshallbe a rebuttablepresumption againstthe maintenance a classactionasto claimsfor which classmembers of would haveto proveknowledge, reliance,or causation an individual basis. on (5) The determination anactionmaybe maintained a that as classactionshallnot relieveanymemberof the classfrom the burdenof proving all elements thememberscause action,includingindividual injury andthe of of amountof damages. (6) In any classactionmaintainedundersubsection (b)(3),the court shalldirectto the members the classthe bestnoticepracticable of underthe circumstances, includingindividualnoticeto all members canbe identified who throughreasonable effort. Thenoticeshallinelude: (i) a generaldescriptionof theaction,includingthe relief sought,andthe names theremesentative of parties; (ii) a statement theright of a memberof the classto of be excluded from the actionby submittingan electionto be excluded, includingthe mamterandtime for exercising election; the 4

(iii) the class;

a description ofpossiblefinancialconsequences for

(iv) a generaldescription any counterclaim notice of or of intent to assert counterclaim or against a by members the class, of includingtherelief sought; that W a statement thejudgment,whetherfavorableor not, will bind members theclasswho arenot excludedfrom the action; of (vi) a statement any memberof the classmay that intervenein the actionanddesignate separate counsel; (vii) the address counsel whommembers the of lo of proposed classmay direct inquiries;and (viii) otherinformationthat the court deems appropriate. (7) Theplaintiff shallbearthe expense the notification of requiredby the foregoingsubsection.Thecourtmayrequireotherpartieslo the litigation to cooperate securing names addresses thepersons in the and of within the classfor the purposeofproviding individualnotice,but any costsincurredby the party in providing suchcooperation shallbepaid initially by theparty claimingthe classaction. Upon terminationof theaction,the COWI allow as may taxablecostsall or part of theexpenses incurredby theprevailingparty. (8) Thejudgmentin an actionmaintainedasa classaction undersubsections (b)(l) or (b)(2),whetheror not favorableto the class,shall includeanddescribe thosewhomthe court finds lo bemembers the class. The of judgmentin anactionmaintained a classactionundersubdivision(b)(3), as whetheror not favorablelo the class,shallincludeandspecifyor describe those to whom thenoticeprovidedin subsection (c)(2)wasdirected,andwho havenot requested exclusion, whomthecourt finds to be members the class. and of (9) Whenappropriate, classmay be divided into subclasses a andeachsubclass treatedasa class,andtheprovisionsof this rule shallthenbe construed appliedaccordingly. and (e) Orders in Conduct of Actions. In the conductof actionsto which this [section/rule]applies,the courtmaymakeappropriate orders:(1) detezmining the course proceedings prescribingmeasures preventunduerepetitionor of or to complicationin thepresentation evidence argument; requiring,for the protection of or (2) of members the classor otherwisefor the fair conductof the action,that noticebe of givenin suchmannerasthe courtmaydirect to someor all of the membersof any stepin theaction,or of theproposed entry ofjudgment,or of theopportunityof members to signify whetherthey considerthe representation andadequate, intervene and fair to
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present claimsanddefenses, otherwise comeinto tbe action; (3) imposing or to conditionson therepresentative partiesor on interveners; requiringthat thepleadings (4) be amended eliminatetherefiomallegations to representation absent to as of persons, and thatthe actionproceed accordingly;(5) dealingwith similar procedural matters.
(0 Dismissal or Compromise.

(1) A class action shall not be dismissedor compromised without the approval of the court, and notice of the proposed dismissalor of compromise be given to all members the classin suchmannerasthe court shall directs. (2) Before approving the dismissal or a compromiseof an actionthat the court hasdetermined be maintainedasa classaction,the court may shall hold a hearingto determinewhetherthe termsof the proposeddismissalor compromise fair, reasonable adequate the class. At suchhearing,all are and for parties to the action, including membersof the class, shall be permitted an opportunityto beheardasthe courtmaydirect. (g) Discovery. Representative partiesandintervenors subjectto are discovery the same in manneraspartiesin othercivil actions. Otherclassmembers are subjectto discoveryin the same manneraspersons arenot parties,but maybe who requiredby the courtto submitto discovery procedures applicableto therepresentative partiesandinterveners.
(b) Appeals. Thecourtsof appeals shallhearappeals from ordersof

district courtsgrantingor denyingclassactioncertificationunderthis sectionifanotice of appealis filed within ten daysafter entryof theorder.
Se&ion 3. [Severability clause.] Section 4. [Repealer clause.] Section 5. [Effective date.]

Approved by the ALEC Board ofDirectors September13, 2000