Chapter 7:
Class Actions
IV. Defining and Managing a Class (part 1)
The process of successfully defining and managing a class includes consideration of many factors. Counsel must carefully select the named plaintiffs and define the class, keeping in mind the Rule 23 (a) and (b) issues discussed above. Next, counsel must address pre-certification issues and the process of moving for class certification. Finally, the possibility of interlocutory appeals, notice and opt-out procedures and communication with the class are all important issues that will be discussed below.
A. Selection of Named Plaintiff(s)
The careful selection of class representatives avoids many procedural problems and presents the case in its best light. If the only available client would not be a good class representative, do not bring the case as a class action.
When evaluating a potential class representative, be alert for conflicts between the interests of the named plaintiff and the putative class; the possibility of mootness of the named plaintiff’s claim; and the standing of the named plaintiff to seek each type of relief sought. In addition, counsel must consider the ability of the plaintiff to cooperate with, and withstand successfully anticipated discovery; and determine whether plaintiffs are required to exhaust administrative remedies prior to bringing suit.
Consideration should also be given to the potential media exposure, possible retaliation by defendants, and the plaintiff’s ability to cope with such pressures. As in any other situation, weaknesses in the client’s case, difficulties in their background and countervailing strengths or poignant facts must be identified.
B. Defining the Class
Rule 23(c)(1)(C) provides that the class may be defined or redefined at any time before final judgment. This may occur either following a motion of either party or by the court./92/ Thus, counsel should reevaluate the initially drafted definition as discovery proceeds and case takes shape. Counsel should request redefinition if appropriate.
When determining the definition of the class, counsel must consider: (1) the time frame, which will determine who may be included; (2) the geographic size of the class; and (3) the common claims and injuries experienced by the class as a whole, all with an eye to the relief requested. The effect on similar ongoing or planned litigation should also be considered.
1. Time Frame
The applicable statute of limitations determines whether to define the class to include individuals harmed before the filing of the case and the cut-off dates to use in determining eligibility for the class. The failure of all individuals to have rights remaining after the expiration of a statute of limitations is not fatal to their inclusion in the class or the certification of the class./93/ The existence of affirmative defenses, such as a statute of limitations, does not preclude class certification./94/
Other factors to be considered in defining the class include: (1) the date and duration of defendant’s challenged action and (2) whether the action is a continuous one. Where the injury is continuous, retroactive and/or prospective relief may be available. In evaluating whether to seek retroactive relief, counsel must determine whether the Eleventh Amendment limits such relief and whether the difficulty in finding class members makes such relief impracticable. The class definition may also include individuals who may be harmed in the future./95/
2. Geographic Scope
Counsel must consider whether there is ongoing or planned litigation in the same or an overlapping geographical area. If other attorneys are likely to bring the same or very similar case in a different geographic area soon, limiting the geographic size of the class is probably a good idea. While expanding the geographic scope may help in establishing numerosity, complications can arise with commonality, management of the class, and relief. At the same time, nationwide class actions are certainly permissible./96/ They may be helpful in avoiding inconsistent applications of policy.
3. Common Claims and Injuries
To assure standing, the class definition should be tied to the injury suffered by class members and to the relief sought. For example, rather than drafting a class definition as “all residents of X public mental institution,” it is better to define the class more specifically as “all residents of X public mental institution who, since [date] have been or will be placed in isolation or restraints without written standards or appeal rights.” The latter definition more precisely shows that the class members suffered an injury, that the injury is caused by the defendants, and that the relief requested by the class will remedy the harm.
The definition of the injury should be factually specific, as opposed to tied to a legal term. This avoids requiring the court to make an individual legal determination regarding each person’s inclusion in the class./97/ The type of relief requested may have an impact on the class definition. For example, in a case where administrative action is challenged, the class may have to be defined as having exhausted administrative remedies in order to obtain relief/98/ unless plaintiffs can show that exhausting administrative remedies would be futile./99/
Reviewing the type of injury suffered by class members may reveal that (1) different legal theories support relief for some, but not all; (2) different injuries are experienced by various groups within the class; or (3) the interests of some of the class conflict with the interests of other class members. In such situations, subclasses may be appropriate./100/ In the first two scenarios, subclasses would probably help clarify the issues and ensure that the claims of the named representative are typical of the claims of the class. In the third, when conflicts arise, most courts will require that the subclasses be represented by independent counsel. Remember that subclasses must independently meet all of the Rule 23 requirements./101/
C. Precertification Discovery
After counsel has selected and defined the class and filed suit, the next questions are whether pre-certification discovery will be allowed and what the scope is of that discovery. The two main issues are: (1) whether discovery related to the existence of the class should be permitted before class certification and (2) whether discovery on the merits should be held in abeyance until the motion for class certification is determined.
1. Class Discovery
Earlier editions of the MANUAL FOR COMPLEX LITIGATION suggested that the determination of whether Rule 23’s requirements are met should generally be decided on the pleadings. Modifying that view somewhat, the most recent edition indicates that class certification decisions may turn on matters outside the pleadings./102/ Sometimes the pleadings alone permit a determination of whether the criteria for class certification in Rule 23(a) and (b) are satisfied./103/ For example, if the defendant’s opposition to the certification motion is based solely on issues of law, the court may make the determination without discovery. However, discovery is often needed./104/ A court may require specific proof that a criterion of class certification is met. For example, counsel may need to demonstrate factually the number of individuals in a putative class in order to establish numerosity.
Occasionally, a court refuses discovery but allows declarations or other evidence to supplement the pleadings in support of or in opposition to the motion for class certification./105/ These may include expert affidavits or other corroborating evidence gathered outside the formal discovery process. At times reasonable inferences and estimates may suffice./106/ Whatever type of evidence is used, the plaintiff bears the burden of making a prima facie showing that the prerequisites of class certification are, or can be, satisfied after discovery./107/
Prior to the 2003 amendments to Rule 23, courts were permitted to conditionally certify a class pursuant to Federal Rule of Civil Procedure 23(c)(1) and reserve the opportunity to reexamine the certification following more extensive discovery./108/ Conditional certification has now been deleted from Rule 23(c)(1)(C)./109/ Nonetheless, one circuit court has found that conditional certification still may be appropriate./110/ Even for conditional certification, a majority of courts require that plaintiffs first make a prima facie showing that all the elements necessary for certification have been met./111/ Local rules may also address the question of whether pre-certification discovery is permitted./112/
If precertification discovery is granted, it should aim to give an “informed judicial assessment” of the class certification issue without arbitrarily excluding information relating to the merits of the case./113/ With respect to discovery of defendants, discovery is generally limited to facts relevant to the Federal Rule of Civil Procedure 23(a) and (b) criteria. In determining whether a course of discovery is relevant to establishing class certification, courts generally consider (1) the amount of time discovery would take, (2) the probability that discovery would be helpful in resolving the issue of class certification, and (3) whether discovery would be overly burdensome. /114/
In an effort both to expedite and to narrow the scope of discovery for class certification, courts commonly employ a number of restrictions./115/ First, geographic and time constraints may be used, limiting discovery to a specific region of the country or for a certain duration./116/ Second, the number of people from whom information is sought may also be restricted. For example, discovery of the proposed class representatives or class members may be limited to a certain number, group, or percentage of individuals in a particular putative class or subclass./117/ If the class defined by the plaintiff is unreasonably broad, a court may also limit discovery relevant to a similar but more practicable class./118/ Third, although depositions are usually acceptable methods for pre-certification discovery, some courts first require a demonstration of good cause for using a deposition. The number and length of requests for production, interrogatories, and depositions are often limited as well./119/ Fourth, representative plaintiffs must be capable of fully financing litigation on behalf of their class, but discovery of financial information is strictly limited. As a result, sworn statements or affidavits often suffice to prove financial adequacy./120/
Generally the courts are hesitant to allow discovery of absent class members./121/ Here the courts balance the defendant’s need for information against the privacy interests of uninvolved parties who did not initiate the suit./122/ Initial discovery is confined to what is necessary for determining whether a proper class action exists. In some instances, courts allow discovery of absent class members./123/ For example, some courts are willing to subject absent class members to discovery where the proponent shows that (1) the discovery is not designed to take undue advantage of class members or to reduce the size of the class; (2) the discovery is necessary; (3) responding to the discovery requests would not require the assistance of counsel or other technical advice; and (4) the discovery seeks information not already known by the proponent./124/ Other courts allow discovery of absent class members only “where a strong showing is made that the information sought: (1) is not sought for the purpose of harassment or altering membership of the class; (2) is directly relevant to common questions and unavailable from the representative parties; and (3) is necessary at trial for issues common to the class.”/125/
Rule 23(d) authorizes district courts to order defendants to aid in determining the identity of absent class members./126/ If the identification can be done with less difficulty and expense by the defendant, a court normally compels assistance. Otherwise, the plaintiffs bear the costs and efforts of such investigatory work.
2. Bifurcation Of Class and Merits Discovery
The Manual for Complex Litigation suggests that bifurcation of discovery may be useful when the merits discovery is not related to the certification issues./127/ Where discovery is bifurcated, pre-certification discovery proceeds while merits discovery is stayed. If merits discovery is stayed, the discovery plan should make clear when the stay will be lifted. Nonetheless, often no bright line distinguishes class and merits discovery. /128/Consequently, courts must balance the interest in gathering a complete record from which to decide class certification and the risk of potentially burdensome or unnecessary discovery if the class certification motion is denied. If the case would likely continue even if class certification is denied, the downside of discovery is less and the court more likely to be permissive with pre-certification discovery. /129/
92. See, e.g., Conant v. McCaffrey, 172 F.R.D. 681, 693-94 (N.D. Cal. 1997) (class redefined by court and recognizing that court can redefine the class at any point in the litigation).
93. See, e.g., Hoxworth v. Blinder, Robinson and Co., 980 F.2d 912, 924 (3d Cir. 1992); In Re Energy Sys. Equip. Leasing Sec. Litig., 642 F. Supp. 718, 752-53 (E.D.N.Y. 1986) (failure of all class members to fall within applicable statute, given sufficient common nucleus of facts, does not defeat statute of limitations). Accord Stirman v. Exxon Corp., 280 F.3d 554, 559 (5th Cir. 2002).
94. See, e.g., Smilow v. Sw. Bell Mobile Sys., Inc., 323 F.3d 32, 39-40 (1st Cir. 2003).
95. Future class members are commonly included, especially when conditions continue to harm individuals coming into the class, if the offending behavior may continue after current class members’ claims are resolved. See, e.g., Reynolds v. Giuliani, 118 F. Supp. 2d. 352, 388-89 (S.D.N.Y. 2000) (Clearinghouse No. 52,229). See also Armstead v. Coler, 914 F.2d 1464, 1465 (11th Cir. 1990); Lightfoot v. District of Columbia, Document 7 in the Documentary Supplement.
96. For a recent example, see the following definition of “class” in a nationwide class action attacking Nissan’s financing scheme: “[A]ll African American consumers who obtained vehicle financing from NMAC in the United States pursuant to NMAC’s ‘retail plan—without recourse’ between January 1, 1990, and the date of judgment.” Cason v. Nissan Motor Acceptance Corp., 212 F.R.D. 518, 523 (M.D. Tenn. 2002) (Clearinghouse No. 53,037). The classic case for nationwide classes was Califano v. Yamasaki, 442 U.S. 682 (1979), which specifically approved the concept. As noted above, however, Congress recently passed legislation significantly affecting the interstate class action.
97. See Kline v. Sec. Guards Inc., 196 F.R.D. 261, 265-69 (E.D. Pa. 2000), vacated on other grounds, 386 F.3d 246 (3d Cir. 2004), for an example of plaintiffs struggling to define a class that does not require the court to reach the merits to determine whether a putative class member is covered in the class definition (plaintiffs’ class definition of “all persons whose communications were intercepted by electronic surveillance” was found unacceptable since definition would require “minihearings” on whether interceptions had occurred and whose communications were actually intercepted).
98. See Kildare v. Saenz, 325 F.3d 1078 (9th Cir. 2003) (Clearinghouse No. 55,216) (requiring exhaustion although plaintiffs’ complaint alleged that social security determinations suffered from “systemic” deficiencies). But see Bowen v. City of N.Y., 476 U.S. 467 (1986) (establishing three-part test to determine whether exhaustion of administrative remedies may be waived in social security cases). See also Lemon v. D.C., 920 F. Supp. 8, 10 (D.D.C. 1996) (applying exhaustion requirement in an Individuals with Disabilities Education Act case).
99. Ass’n of Retarded Citizens v. Teaque, 830 F.2d 158 (11th Cir. 1987) (brought on behalf of three individuals stating rule that no exhaustion required if exhaustion would be futile).
100. Fed. R. Civ. P. 23(c)(4)(B).
101. In re Cendant Corp. Sec. Litig., 404 F.3d 173, 202 (3rd Cir. 2005) (discussing potential conflicts of counsel in representing subclasses and difficulties in managing subclasses).
102. Compare Manual for Complex Litigation (Third), supra note 1, § 30.1 with Manual for Complex Litigation (Fourth), supra note 1, § 21.14. For discussions that emphasize the importance of the pleadings as a basis for certification decisions, see In re Am. Med. Sys., Inc., 75 F.3d 1069, 1086 (6th Cir. 1996) (decision on certification should be deferred pending discovery if existing record inadequate for determination). See generally James F. Jordan, Discovery and Evidentiary Issues in Non-Federal Question Class Actions, 679 PLI/Lit 439 (recognizing that the same issues apply in class actions under federal substantive claims). The courts balance the promotion of effective case management, the prevention of potential abuses, and the protection of the rights of all parties. Tracy v. Dean Witter Reynolds Inc., 185 F.R.D. 303, 304-05 (D. Colo. 1998) (barring class discovery as there was no demonstration of some factual basis for claim of nationwide class). See also Agan v. Katzman & Korr, P.A., 222 F.R.D. 692, 696 (S.D. Fla. 2004) (recognizing that sometimes courts may have to go beyond the pleadings to rule on certification).
103. See Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 160 (1982); Roe v. Operation Rescue, Inc., 123 F.R.D. 500, 502 (E.D. Pa. 1988) (denying class discovery and certifying class as court need only inquire into facts as presented in pleadings and affidavits if documents sufficiently indicate requirements met).
104. See, e.g., Dickson v. Chi. Allied Warehouses Inc., No. 90 C 6161, 1993 WL 362450, at *11; 1994 U.S. Dist. LEXIS 2849 (N.D. Ill. Sept. 15, 1993). In fact, many jurisdictions hold that a trial court’s refusal to allow any discovery is an abuse of discretion. See Baldwin & Flynn v. Nat’l Safety Assoc., 149 F.R.D. 598, 602 (N.D. Cal. 1993).
105. See, e.g., Baldwin & Flynn 149 F.R.D. at 601.
106. 3 Conte & Newberg, supra note 1, § 7.8.
107. See, e.g., Heerwagen v. Clear Channel Commc’ns, 435 F.3d 219, 234 (2d Cir. 2006).
108. See, e.g., In re Diet Drugs Prods. Liab. Litig., 282 F.3d 220 (3d Cir. 2002); Thiessen v. Gen. Elec. Capital Corp., 267 F.3d 1095 (10th Cir. 2001). In fact, the determination of class certification is always subject to change at a later date. See, e.g., Cent. Wesleyan Coll. v. W.R. Grace and Co., 6 F.3d 177, 189 (4th Cir. 1997); Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 160.
109. Fed. R. Civ. P. 23(c)(1) advisory committee’s notes, 2003 amends.
110. Denney v. Deutsche Bank Sec., Inc., 443 F.3d 253, 270 (2d Cir. 2006). See also discussion at note 130 infra.
111. See, e.g., Mantolete v. Bolger, 767 F.2d 1416 (9th Cir. 1985); Selwood v. Va. Mennonite Ret. Cmty., Inc., No. 5:04CV00021, 2004 U.S. Dist. LEXIS 17539 (W.D. Va. Aug. 31, 2004).
112. See, e.g., L.R. 23.1 (S.D. Ill.) (requiring mandatory scheduling conference to identify length and scope of necessary discovery regarding class certification). See also L.R. 23.1(b) (D.D.C.) (ruling may be postponed pending discovery); L.R. 23.2(f) (N.D. Tex.) (requiring motion for certification to address discovery necessary and time required).
113. Manual for Complex Litigation (Fourth), supra note 1, § 21.14. See also, Fed. R. Civ. P. 23(c)(1) advisory committee’s notes, 2003 amends.
114. See, e.g., Trevino v. Celanese Corp., 701 F.2d 397, 405 (5th Cir. 1983); Duval v. Gleason, No. C-90-0242-CAL, 1991 U.S. Dist. LEXIS 9016 (N.D. Cal. June 12, 1991).
115.See generally Note, Requests for Information in Class Actions, 83 YALE L. J. 602 (1974), especially for potential solutions with regard to discovery of absent class members.
116. Manual for Complex Litigation (Fourth), supra note 1, § 21.14.
117. See West v. Circle K Stores, Inc., No. CIV. S-04-0438, 2006 U.S. Dist. LEXIS 25164, at *2; 2006 WL 1652598 (E.D. Cal. Feb. 14, 2006) (pre-certification discovery may be limited to a particular subclass); Transamerican Ref. Corp. v. Dravo Corp., 139 F.R.D. 619, 621-22 (S.D. Tex. 1991) (limiting discovery to fifty of 6,000 absent class members).
118. See, e.g., Wash. v. Brown & Williamson Tobacco Corp., 959 F.2d 1566, 1571 (11th Cir. 1992) (district court correctly ended plaintiffs’ discovery when, after three years, plaintiffs could identify no class more specific than “all blacks”).
119. Manual for Complex Litigation (Fourth), supra note 1, § 21.14.
120. 7A Wright et al., supra note 1, § 1767, at 381-88; Waldman v. Electrospace Corp., 68 F.R.D. 281 (S.D.N.Y. 1975).
121. See, e.g., Dellums v. Powell, 566 F.2d 167, 187 (D.C. Cir. 1977); Bell v. Woodward Governor Co., No. 03 CIV. S-04-0438, 2005 U.S. Dist. LEXIS 26757; 2005 WL 3299179 (N.D. Ill. Nov. 7, 2005).
122. 7B Wright et al., supra note 1, § 1796.1, at 57; In re Carbon Dioxide Industry Antitrust Litig., 155 F.R.D. 209 (M.D. Fla. 1993).
123. See, e.g., Schwartz v. Celestial Seasonings Inc., 185 F.R.D. 313 (D. Colo. 1999) (allowing discovery of the absent class members in the form of a clear, good-faith questionnaire relating to damages and alleged reliance); Transamerican Refining Corp. v. Dravo Corp., 139 F.R.D. 619 (S. D. Tex 1991) (discovery by interrogatories and request for documents generally allowed when relevant to common questions, posed in good faith, not unduly burdensome, and information not available to class representatives).
124. See Collins v. Int’l Dairy Queen, 190 F.R.D. 629, 630-31 (M.D. Ga. 1999), citing Clark v. Universal Builders, 501 F.2d 324 (7th Cir. 1974).
125. McCarthy v. Paine Webber Group, Inc., 164 F.R.D. 309, 313 (D. Conn. 1995); Morgan v. UPS of America, No. 4:94-CV-1184 (CEJ), 1998 U.S. Dist. LEXIS 20197; 1998 WL 785322 (E.D. Mo. Oct 16, 1998). See also Cox v. Am. Iron Pipe Co., 784 F.2d 1546 (11th Cir. 1986) (requiring special circumstances and good cause be shown).
126. Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340 (1978). See also Sollenbarger v. Mountain State Tel. and Tel. Co., 121 F.R.D. 417 (D.N.M. 1988) (where cost of alternative method “drastic,” plaintiffs could notify potential class members via insert in monthly bills sent by defendant).
127. Manual for Complex Litigation (Fourth), supra note 1, § 21.141.
128. This issue was discussed in In re Hamilton Bancorp Inc. Sec. Litig., No. 01CV0156, 2002 WL 463314, at *1 (S.D. Fla. Jan. 14, 2002) (directing the development of a discovery plan that prioritizes class-related discovery but does not deprive parties of merits discovery).
IV. Defining and Maintaining a Class (part 2) >