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Class Actions 101: How to Obtain (or Defeat) Class Certification

Adam Eric Polk

Class Actions 101: How to Obtain (or Defeat) Class Certification
Mercedes Rancaño Otero via Getty Images

On the first day of the National Institute on Class Actions, CADS members Andrew McGuinness and Daniel Karon presented their now legendary “Class Actions 101” seminar, which is a valuable tool on the requirements that must be satisfied to certify a class.

The following is a summary for the major rules of the road for those new to prosecuting or defending class cases.

First, Rule 23 has several implicit requirements:

  1. There must be a live claim or controversy in dispute. In practice this means that the named class representative must have a live claim, at least up until the class is certified.
  2. The class representatives must be members of the proposed class.
  3. The class must be defined by objective criteria. This implicit mandate, referred to in some circuits as “ascertainability,” can also require that the plaintiff identify an administratively feasible method of determining who is in the class. What standard applies depends on the circuit.

Second, with respect to explicit requirements, there are requirements under Rule 23(a) that apply to all classes, and requirements under various subsections of Rule 23(b) that apply depending on the type of class.

The Rule 23(a) requirements must be satisfied for all class cases. They are:

  1. Numerosity. Generally a class is sufficiently numerous if it has more than 40 members.
  2. Commonality. Common questions must exist, and those questions must be susceptible to common answers.
  3. Typicality. As go the claims of the class representatives, so go the claims of the class.
  4. Adequacy of class representative and counsel. (1) The class representatives must have no major conflicts of interest with absent class members. (2) Counsel must have the requisite experience with the claims and class actions, and must not made major blunders over the course of the case.

At least one subsection of 23(b) must also be satisfied.

  1. 23(b)(1)(A): A class can be certified if there is a risk of inconsistent rulings establishing incompatible standards of conduct for the party opposing a class. These are cases, like an ERISA case brought on behalf of the whole plan, where a determination about whether the defendant’s conduct violated the law will have a bearing on the defendant’s future conduct with respect to many similarly situated individuals.
  2. 23(b)(1)(B): This subsection applies to cases with limited fund settlements. Where the funds available for settlement are less than aggregate damages, a class can be certified to ensure that the funds are allocated appropriately. In this instance, there is an optional notice procedure, and opt outs are not permitted. The class mechanism is useful, for example, because if there is a limited pot of money, then an individual resolution will impact the relief available to the remainder of the plaintiffs.
  3. 23(b)(2): This subsection covers classes seeking declaratory or injunctive relief. Injunction-only classes have no notice requirement or opt outs. The rule requires only that the defendant “acted or refused to act on grounds that apply generally to the class.”
  4. 23(b)(3): For cases in which the class seeks damages, the named plaintiffs must establish predominance and superiority.
    1. For the predominance requirement to be met, common issues must predominate over individual issues. Issues to be aware of that could present problems for plaintiffs on this prong include the following: (1) affirmative fraud claims with a reliance requirement; (2) personal injury claims that require proof of specific causation; and, (3) other claims to which there are unique defenses.
    2. The proponent of class certification must also show that a class action is superior to other means of litigating the case, focusing on factors like the class’s interest in concentrating case in one forum; (2) the interests of class members in controlling their own litigation; (3) problems with managing the class case; and (4) the extent of other similar litigation.