Chapter 7:
Class Actions

I. Introduction

This chapter discusses a range of issues related to class action practice./1/ Legal aid lawyers historically have used class actions to obtain relief for large groups of clients in a broad range of substantive areas./2/ Since 1996, however, organizations funded by the Legal Services Corporation (LSC) have been barred from bringing or participating in class actions and must explore other approaches for systemic relief, such as declaratory judgment actions./3/ Nonetheless, for those attorneys able to bring class actions, this Chapter reviews the strategic considerations underlying the decision whether to bring a class action. It then discusses the class certification requirements set forth in Rule 23 of the Federal Rules of Civil Procedure, including the 2003 amendments; how to define and manage the class action; and settlement issues.

Amendments to Rule 23 became effective December 1, 2003./4/ These changes address four areas: the timing of class certification under Rule 23(c)(1); the notice provisions in Rule 23(c)(2); the settlement-review process in Rule 23(e); and the addition of two new subdivisions regarding the appointment of class counsel (Rule 23(g)) and attorney’s fee awards (Rule 23(h)). These changes will also be discussed below. In addition, in February 2005, the “Class Action Fairness Act of 2005” (CAFA) was signed into law./5/ CAFA was passed in an effort to limit forum shopping for perceived abuses of the class action mechanism in state courts seen as plaintiff–friendly. It also addresses concerns about “coupon settlements” in consumer class actions. The provisions of this Act have little applicability to the poverty law community.

1. Excellent materials are available for more in-depth review of the matters covered in this chapter. See Alba Conte & Herbert B. Newberg, Newberg on Class Actions--A Manual for Group Litigation and State Levels (4th ed. 2002 & Nov. 2005 Supp.); 7-7B Charles A. Wright et al.., Federal Practice and Procedure (3d ed. 1998 & 2006 Supp.); James William Moore et al., 3B Moore's Federal Practice (3d ed. 1997 & 2005); Jonathan Sheldon, Consumer Class Actions: A Practical Litigation Guide (5th ed. 2002); National Consumer Law Center, The Consumer Credit and Sales Legal Practice Series (useful information for all class actions); Manual for Complex Litigation (Fourth) § 21 (2004)(available at http://www.fjc.gov). Two useful websites are http://www.classactionreports.com and http://www.lawyersandsettlements.com.

2. See, e.g., Evans v. Jeff D., 475 U.S. 717 (1986).

3. See 42 U.S.C. § 2996e(d)(5); 45 C.F.R. § 1617.3. However, LSC program attorneys may represent individual clients “seeking to withdraw from or opt out of a class or obtain the benefit of relief ordered by the court, or non-adversarial activities, including efforts to remain informed about, or to explain, clarify, educate or advise others about the terms of an order granting relief.” Id. at § 1617.2(b)(2). See Chapter 9, Section III (declaratory judgments) and Chapter 1, Section IV.C. (impact litigation under the restrictions) of this Manual. See also, Ilisabeth Smith Bornstein, From the Viewpoint of the Poor: An Analysis of the Constitutionality of The Restriction on Class Action Involvement By Legal Services Attorneys, 2003 U. Chi. Legal F. 693 (restriction on class actions unconstitutional).

4. The amendments were adopted after a 10-year study by the Advisory Committee on Civil Rules. See generally Anthony Rolloe and Gabriel A. Crowson, Mapping the New Class Action Frontier – A Primer on the Class Action Fairness Act and Amended Federal Rule 23, 59 Consumer Fin. L.Q. Rep. 11, 18-22 (2005).

5. Class Action Fairness Act of 2005, Pub. L. No. 109-2, 114 Stat. 4 (primarily codified at 28 U.S.C. § 1332 (diversity) and §§ 1441 et seq. (removal)). See generally Rolloe and Crowson, supra note 4, at 11-18.

II. Whether to Bring a Class Action >