#11091 - Class Actions - Complex Litigation

Class Actions

1. In General

   1. A party seeking class certification must affirmatively demonstrate his compliance with Rule 23. Dukes (CB 79).

      1. In deciding whether to certify a class under Rule 23, the district court must make whatever factual and legal inquires are necessary and must consider all relevant evidence and arguments presented by the parties. In re Hydrogen Peroxide (CB 267).

         1. The decision to certify a class calls for findings by the court, not merely a “threshold showing” by a party, that the requirements of Rule 23 are met. In re Hydrogen Peroxide (CB 267).

         2. Factual determinations supporting Rule 23 findings must be made by the preponderance of the evidence. In re Hydrogen Peroxide (CB 267).

         3. The court’s obligation to consider all relevant evidence and arguments extends to expert testimony, whether offered by a party seeking certification or by a party opposing it. In re Hydrogen Peroxide (CB 267).

            1. In its sound discretion, a district court may find it unnecessary to consider certain expert opinion with respect to a certification requirement, but it may not decline to resolve a genuine legal or factual dispute because of an overlap with the merits. In re Hydrogen Peroxide (CB 277).

      2. Sometimes it may be necessary for the court to probe behind the pleadings before coming to rest on the certification question. Dukes (CB 79).

         1. The court must resolve all factual and legal disputes relevant to class certification, even if they overlap with the merits, including disputes touching on elements of the cause of action. In re Hydrogen Peroxide (CB 267).

      3. Rule 23 allows certification of any class suit that satisfies the requirements of Rule 23(a) and (b), regardless of whether it is a diversity suit, state law provides the rule of decision, or state law would preclude class certification. See Shady Grove.

         1. In Shady Grove, the Court held that a diversity class action could be maintained under Rule 23 where the requirements of Rule 23(a) and (b) were satisfied, even though the cause of action was based upon New York law and the New York law prohibited class actions in suits seeking penalties or statutory minimum damages.

         2. The Court held that since Rule 23 answers the entire question of whether a class action can be certified in federal court, the fact that New York law provides the rules of decision and would preclude the class action in that did not preclude certification of the class. (CB 364).

      4. Rule 23 satisfies the requirements of the Rules Enabling Act, because it governs only “the manner and the means” by which the litigants’ rights are enforced and because Rule 23 “leaves the parties legal rights and duties intact and the rules of decision unchanged.” Shady Grove

2. RULE 23(a): “One or more members of a class may sue or be sued as representative parties on behalf of all members only if:” (CB 30).

   1. An individual litigant seeking to maintain a class action must meet the prerequisites of numerosity, commonality, typicality, and adequacy of representation specified in Rule 23(a). Falcon (CB 73).

      1. A class action may only be certified if the trial court is satisfied, after a rigorous analysis, that the prerequisites of Rule 23(a) have been satisfied. Falcon (CB 74).

         1. Frequently, this rigorous analysis will entail some overlap with the merits of the plaintiff’s underlying claims. Dukes (CB 79).

   2. (a)(1) Numerosity: whether “the class is so numerous that joinder of all members is impracticable” (CB 30).

      1. The numerosity requirement is rarely contested.

         1. In most instances in which class certification is sought, it will be readily apparent that this requirement has been met.

      2. “Impracticable” does not mean “impossible.” 7A Federal Practice and Procedure §1762 (CB 70).

         1. The class representative need only show that it is extremely difficult or inconvenient to join all the members of the class. 7A Federal Practice and Procedure §1762 (CB 70).

      3. “The class representative is not required to establish the exact number in the proposed class.” Wright (CB 70).

         1. “Plaintiff must show some evidence of or reasonably estimate the number of class members.” Wright (CB 70).

         2. “Estimates as to the size of the proposed class are sufficient for a class action to proceed.” Wright (CB 70).

         3. “Mere speculation and unsubstantiated allegations as to numerosity, however, are insufficient to satisfy Rule 23(a)(1).” Wright (CB 70).

      4. Proposed classes numbering in the single digits or teens have not been certified.

      5. The case law is mixed where the proposed class numbers between 30 and 100 class members.

   3. (a)(2) Commonality: whether “there are questions of law or fact common to the class” (CB 31).

      1. Commonality requires the plaintiff to demonstrate that the class members have suffered the same injury. Dukes (CB 78).

         1. This does not mean merely that they have all suffered a violation of the same provision of law. Dukes (CB 79).

         2. To satisfy the commonality requirement, the claim of the class “must depend upon a common contention.” Dukes (CB 79).

         3. “That common contention, moreover, must be of such a nature that it is capable of classwide resolution . . . in one stroke.” Dukes (CB 79).

         4. “What matters to class certification . . . is not the raising of common ‘questions’ . . . but, rather the capacity of a classwide proceeding to generate common answers apt to drive the resolution of the litigation.” Dukes (CB 79).

            1. “Dissimilarities within the proposed class are what have the potential to impede the generation of common answer.” Dukes (CB 79).

      2. “The commonality and typicality requirements of Rule 23(a) tend to merge.” Falcon n.13 (CB 73).

         1. “Both serve as guideposts for determining whether under the particular circumstances maintenance of a class action is economical and whether the named plaintiff’s claims and the class claims are so interrelated that the interests of the class members will be fairly and adequately protected in their absence.” Falcon n.13 (CB 73).

         2. The commonality and typicality requirements “also tend to merge with the adequacy-of-representation requirement, although the latter requirement also raises concerns about the competency of class counsel and conflicts of interest. . . .” Falcon n.13 (CB 73).

      3. Commonality, typicality, and adequacy of representation all ask whether the proposed class would be a sufficiently cohesive unit as to warrant deviation from the usual principle that “one is not bound by a judgment in personam in a litigation in which he is not designated as a party or to which he has not been made a party by service of process.”

         1. This comes down to whether there was a preexisting relationship among the members of the class prior to any lawsuit being filed.

         2. In thinking about the commonality and typicality requirements, one might best think in terms of the cohesiveness of the proposed class.

      4. A class representative must be part of the class and possess the same interest and suffer the same injury as the class members. Falcon (CB 73).

         1. In East Texas Motor, a Title VII case, the Court held that class certification was improper where the named plaintiffs “could have suffered no injury as a result of the allegedly discriminatory practices, and . . . were . . . simply not eligible to represent a class of persons who did allegedly suffer injury.” (CB 73).

         2. In Falcon, a Title VII case where the named plaintiff was attempting to maintain a class action on behalf of all Mexican-Americans that were denied promotion or not hired by General Telephone Company because of their race, the Court held that the commonality and typicality requirements were not met because, “[c]onceptually, there is a wide gap between (a) an individual’s claims that he has been denied a promotion on discriminatory grounds, and his otherwise unsupported allegations that the company has a policy of discrimination, and (b) the existence of a class of persons who suffered the same injury as that individual, such that the individual’s claim and the class claims will share common questions of law or fact and that the individual’s claim will be typical of the class claims.” (CB 73).

            1. HOWEVER, commonality and typicality would have been satisfied:

               1. (1) “If [Defendant] used a biased testing procedure to evaluate both applicants and incumbent employees, a class action on behalf of every applicant or employee who might have been prejudiced by the test . . . .” Falcon n.15 (CB 74).

OR

2. (2) “Significant proof that an employer operated under a general policy of discrimination conceivably could justify a class of both applicants and employees if the discrimination manifested itself in hiring and promotion practices in the same general fashion, such as through entirely subjective decisionmaking processes.” Falcon n.15 (CB 74).

2. The court stated that “[e]ven though evidence that [Plaintiff] was passed over for promotion when several less deserving whites were advanced may support the conclusion that [Plaintiff] was denied the promotion because of his national origin, such evidence would not necessarily justify the additional inferences (1) that this discriminatory treatment is typical of [Defendant’s] promotion practices, (2) that [Defendant’s] promotion practices are motivated by a policy of ethnic discrimination that pervades [Defendant’s] Irving division, or (3) that this policy of ethnic discrimination is reflected in [Defendant’s] other employment practices, such as hiring, in the same way it is manifested in the promotion practices.” Falcon (CB 73-74).

   1. “These additional inferences demonstrate the tenuous character of any presumption that...