During the 1980s, class-action litigation exploded, as plaintiffs' counsel vigorously pursued class actions in various settings while appellate courts tolerated the "certify now and worry later" approach many trial courts adopted. Things changed in the early 1990s as influential appellate courts began to identify serious substantive problems when analyzing whether proposed trial plans permitted full adjudication of all contested issues for the claims of absent class members. As a result, classaction defendants now are in a much better position to challenge many proposed class certifications.
The goals of this chapter are: (1) to identify a framework for class certification analysis that practitioners can use to identify significant problems with certification proposals in the trial court; and (2) to formulate arguments for interlocutory appeals of adverse class-certification decisions.
II. Outline of Basic Approach and Theory
A. Basic Operational Concept
The concept of a class action is to use the case of one person (the class representative) as the vehicle for adjudicating not only that person's claims but also the claims of other persons (the absent class members). That works if all claims share common questions of law and fact that can be efficiently decided for all class members1 through the trial of the class representative's case. The term "common questions" is a term of art. Truly common questions are those that "when answered as to one class member are answered as to all class members." But in many proposed class certifications, there are individual issues presented for trial on essential elements of the absent class members' claims.
B. Basic Defense Concept
Since a class action is a procedural device, a class-action defendant has a due process right to discovery and a Seventh Amendment right to a jury trial on every genuine issue of material fact on every essential element of every claim asserted by every proposed class member. Unless the class-action proceeding can be structured so that the class action defendant's constitutional rights to discovery and a jury trial on the absent class members' claims are preserved, certification is improper.
If a class action defendant can show that the proposed trial plan will violate the constitutional rights to discovery and a jury trial, then the individual issues predominate, and class certification is not a superior means for adjudicating the controversy. Under those circumstances, class certification must be denied.
Often the class-action proponent's trial plan will fail to protect these fundamental rights, and the class-action opponent can show that formulating a manageable trial plan that does protect these rights is impossible.
III. Applicable Rules
A. Fed. R. Civ. P. 23
Every federal class action must satisfy the four prerequisites of subsection (a) of Rule 23 Â– numerosity, commonality, typicality, and adequacy.2 Federal case law favors class-action proponents on the Rule 23(a) requirements, thus defeating proposed class certification for failure to satisfy those requirements is usually difficult.
Besides satisfying all Rule 23(a) requirements, every federal class action must also satisfy one of the three subparts of Rule 23(b). Most proposed class actions seek certification under Rule 23(b)(3),3 the subsection that applies to class claims involving money damages. Aggregating the damages claims of a large number of class members supports a claim for a large amount of attorneys' fees and poses a serious financial threat to a defendant. Thus, this chapter concentrates on opposing proposed Rule 23(b)(3) classes.
B. Parallel State Rules
Most states have rules that parallel Rule 23. Further, most state supreme courts interpret those rules by following the federal decisions interpreting Rule 23. A chart comparing the state rules to the federal rule and identifying those states that look to the federal decisions is included as Appendix A.
IV. Proper Analysis of a Rule 23(b)(3) Class Action Proposal
The key to opposing Rule 23(b)(3) class certifications is to force the class proponent to produce a plan detailing how the absent class members' claims will be adjudicated through the trial of the class representative's individual case.
A. Class Certification Requires Rigorous Analysis
A district court must rigorously scrutinize a class-certification motion under Rule 23's prerequisites.4 While a district court has broad discretion to certify a class, it must exercise that discretion within the confines of Rule 23.5 The classcertification proponent must demonstrate that all prerequisites of Rule 23 have been met.6
Subsection (b)(3) of Rule 23 requires the trial court to find that predominance and superiority exist: "that the questions of law or fact common to the members of the class predominate over any questions affecting only the individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy."7
B. The Fifth Circuit's Decision in Castano Illustrates the Proper Rigorous Analysis Under Rule 23(b)(3).
In Castano v. American Tobacco Co.,8 the Fifth Circuit vacated a class-certification order because the district court had failed to perform the analysis necessary to determine whether the certification could satisfy the predominance and superiority requirements. The Fifth Circuit determined that the proposed class could not meet those requirements, and remanded the case with directions to dismiss the class complaint. Castano thus provides explicit guidance on how to evaluate proposed Rule 23(b)(3)certifications.
In Castano, four proposed class representatives sought certification of a nationwide class against seven tobacco companies and the Tobacco Institute, Inc. Plaintiffs sought compensatory and punitive damages and attorneys' fees based on nine state-law causes of action. The plaintiffs initially defined a class of "all nicotine dependent persons in the United States" who smoked since 1943, including current, former, and deceased smokers. At the district court's request, the plaintiffs proposed a four-phase trial plan: a first phase on common issues of "core liability"; a second phase that would determine compensatory damages in a sample group of cases and establish a ratio for punitive damages awards; a third phase for assessment of compensatory damages for the remaining class members; and a fourth phase involving application of a punitive-damages multiplier to individual damage awards.9
The district court granted conditional certification under Rule 23(b)(3) for four categories of class-action issues: (1) core liability; (2) injury-in-fact, proximate cause, reliance, and affirmative defenses; (3) compensatory damages; and (4) punitive damages.10
The Fifth Circuit reversed. We will use the Fifth Circuit's analysis to illustrate ways to oppose class certification.
1. A proposed trial plan is essential to proper predominance analysis.
To determine whether the proposed class action satisfies the predominance requirement, a district court must analyze how the claims of the individual class representatives and those of absent class members will be adjudicated. At the district court's direction, the Castano plaintiffs had submitted a four-phase trial plan. Because of an erroneous belief that it could not look beyond the pleadings when deciding certification, the district court failed to analyze how key elements of the class members' claims would be adjudicated under the proposed trial plan.
In Castano, the Fifth Circuit faulted the district court for failing to analyze how the "addiction-as-injury" claims would proceed to judgment under the trial plan. The district court had defined "whether defendants knew cigarette smoking was addictive, failed to inform cigarette smokers of such, [and] took actions to addict cigarette smokers" as a common factual issue. But it did not discuss why such "core liability" issues would be a significantÂ–not just commonÂ–part of each individual trial, nor did it discuss why these "core liability" issues would necessarily predominate over individual issues.11 In reversing, the Fifth Circuit found that, without knowing how addiction-as-injury cases would actually be tried, the district court could not possibly know whether common issues would be a "significant" portion of the individual trials. By assuming that common issues would be "significant" simply because they were common, the district court erred. The district court's logic "would write the predominance requirement out of the rule," because "any common issue would predominate if it were common to all the individual trials.12
Thus, in analyzing predominance, the district court must analyze what essential factual and legal issues exist regarding the claims of the absent class members and how those essential issues will be tried in conjunction with the trial of the class representative's claims. This can ocur only when a proposed trial plan is presented.
It is not merely appropriate for class proponents to formulate a proposed trial plan, as happened in Castano; it is essential that they do so to meet their burden of proving predominance under Rule 23(b)(3). Without rigorously analyzing the proposed trial plan, the district court cannot determine whether common issues predominate over individual issues.13 Accordingly, the class-action opponent must serve discovery to make the proponent formulate a trial plan.
2. Analysis of proposed trial plans is not limited to the pleadings.
Once the proponent produces a trial plan, the trial court must rigorously analyze it. The Castano court found it not only appropriate, but necessary, for the district court to go beyond the pleadings to analyze a proposed trial plan:
A district court certainly may look past the pleadings to determine whether the reuirements of rule 23 have been met. Going beyond the pleadings is necessary, as a court must understand the claims, defenses, relevant facts and applicable substantive law in order to make a meaningful determination of the certification issues.14
The district court's failure to look beyond the pleadings and analyze "the claims, defenses, relevant facts and applicable substantive law" resulted in "an incomplete and inadequate predominance inquiry."15
A trial court may not conditionally certify a class and then defer analysis of how essential issues will be decided. In Castano, the district court did attempt some specific analysis on the plaintiffs' fraud claim but determined only that it would be "premature" to hold that individual reliance issues predominated over common issues. The district court refused to inquire into the merits of the fraud claim and concluded it could conditionally certify the class and defer the consideration of how reliance would affect predominance. The Fifth Circuit found the district court's approached flawed:
The problem with the district court's approach is after the class trial, it might have decided that reliance must be proven in individual trials. The court would then have been faced with the difficult choice of decertifying the class after Phase 1 and wasting judicial resources, or continuing with a class action that would have failed the predominance requirement of rule 23(b)(3).16
Thus, in deciding whether to certify a class action, a district court must analyze how the essential issues will be decided to determine how a judgment can be entered on the class claims. The purpose of this analysis is not to decide those essential issues on the merits, but to decide which essential issues probably will be contested. If a genuine issue of fact on a particular issue is likely, the defendant has a due process right to adequate discovery and a Seventh Amendment right for a jury to resolve that issue.
3. Proper predominance and superiority analysis requires an analysis of the steps necessary for entry of a final judgment.
The proponent's trial plan must demonstrate how the proposed class action will proceed to a final judgment on the absent class members' claims.17 Only then can the trial court assess whether "the questions of law or fact common to the members of the class predominate over any questions affecting only individual members," and whether a class action is "superior to other available methods for the fair and efficient adjudication of the controversy."
4. Necessity for identification of "true common issues."
The essential issues typically will include both those of law and of fact. The trial court's analysis of those issues will determine which issues are common and which individual. Here, "common issue" is a term of art. A "true common issue" is an issue that, when decided in a proposed class representative's case, is also decided for the absent class members (or a defined sub-set of them). The relevant focus then is not on whether the legal or factual question is the same, but on whether the answer to the legal or factual question in the case of the class representative will also answer that legal or factual question in the cases of the absent class members.18
The predominance inquiry then requires the proponent to show that the answers to jury questions submitted in the class representative's case will adjudicate all, or at least most, of the essential elements of the absent class members' claims. If issues remain for decision on other essential elements of the absent class members' claims, the proponent must show that those claims can be adjudicated in a summary fashion. Otherwise, the proceeding will become unmanageable, and common issues will no longer predominate. In practical terms, the proponent must show that, after the trial of the class representative's case, summary judgment will be appropriate on most, if not all, of the claims of the absent class members.
When a court makes the necessary predominance analysis, its determination of whether essential legal or factual issues are "true common issues" is often decisive. If the number of absent class members is large, and there are essential issues that are individual, the requisite predominance will not likely exist. That is particularly true if individual jury trials will be necessary on one or more essential issues of fact for all class members, not just for the proposed class representatives. And, as discussed later, separating essential issues for trial before separate juries raises serious Seventh Amendment problems.
5. The predominance analysis must encompass all essential legal and factual issues necessary to adjudicate the claim of the proposed class.
In creating a settlement class, the parties may agree to forego individual jury determinations even on such essential issues as proof of individual antitrust injury or the amount individual damages. But in a contested class certification proceeding, the parties opposing certification have constitutional rights to adequate discovery and a jury trial on all essential fact issues underlying the claims of both the proposed class representatives and the absent class members.19
To show predominance, the proponent must propose a trial plan that: (1) identifies which legal and factual issues are essential to enter judgment on the claims of the proposed class representatives; (2) analyzes which of the legal and factual issues essential to the cases of the absent class members can be decided in the trial of the cases of the proposed class representatives, and how that will occur; and (3) analyzes what additional proceedings will be necessary to enter a class judgment or individual judgments on the claims of the absent class members, and how those proceedings will be conducted.
The district court then must analyze the proposed trial plan to make certain it is manageable and protects all substantive rights of those opposing certification. In particular, the district court must consider whether a jury's answer to a question in the trial of the class representative's claims will resolve elements of a proposed class claim. Further, the district court must consider whether there will be other jury questions on other essential elements of that class claim that must be answered in another jury trial, and whether those essential issues can be separated for trial without violating the Seventh Amendment.20 The district court must deny certification un-less the proponent shows that both the trial of the class representative's claims and any subse-quent proceedings are manageable and will protect the rights of the parties opposing certification.
C. Inquiries Necessary for a Rigorous Analysis of Rule 23's Superiority Requirement.
1. Analysis of the four factors listed in Rule 23(b)(3).
Castano also demonstrates how to make the superiority analysis. Rule 23(b)(3) itself identifies four matters pertinent to the analysis of its predominance and superiority prerequirements: "(A) the interest of the members of the class in individually controlling the prosecution or defense of separate actions; (B) the extent and nature of any litigation already commenced by or against members of the class; (C) the desirability or undesirability of concentrating litigation of claims in the particular forum; (D) the difficulties likely to be encountered in the management of a class action."21 Castano's superiority discussion deals with all four factors.
The district court acknowledged that manageability weighed against certification but nevertheless concluded that superiority existed because of the desirability of concentrating the litigation in the class forum to preserve judicial resources by avoiding the burdens of individual case adjudication.22 This thinking was error, the Fifth Circuit concluded, because in fact, numer-ous other addiction-as-injury cases simply did not yet exist. Therefore, any judicial crisis justifying concentration in the class forum was only theoretical. Until a track record existed demonstrating a substantial systemic burden from a large number of individual cases, the district court erred by making a superiority determination based upon such speculation.23 Thus, in weighing three of the four factors listed in Rule 23(b)(3), the Fifth Circuit found that two things weighed against a finding of superiority: manageability problems and the absence of any actual systemic burden from existing litigation over the same controversy.
The Fifth Circuit separately considered the "individual control factor," and found that a "negative value suit"Â–the "most compelling rationale for finding superiority in a class action," Â–was absent.24 Rather, the individual injury claims were high, and that punitive damages and attorneys' fees were available under many, if not most, of the states' laws. Under those cir-cumstances, the members of the proposed class had adequate incentive to pursue individual claims. Thus, the four Rule 23(b)(3) factors weighed against a finding of superiority.
2. The "judicial blackmail" factor may militate against a superiority finding.
Rule 23(b)(3)'s list of four factors is "nonexhaustive."25 In analyzing superiority, the Castano court identified other factors weighing against a finding of superiority. The panel spe-cifically noted that class certification can dramatically affect the stakes for defendants by magni-fying and strengthening the number of unmeritorious claims and by creating insurmountable pressure on defendants to settle. Since each plaintiff in Castano might receive a large award, and fee shifting often was available, the Fifth Circuit found it unfair to subject the defendants to the extreme pressure to settle rather than risk a massive adverse verdict. The court endorsed then-Chief Judge Posner's superiority analysis in another case:
For this consensus or maturing of judgment, the district judge proposes to substitute a single trial before a single jury. . . . One jury . . . will hold the fate of an industry in the palm of its hand. . . . . That kind of thing can happen in our system of civil justice. . . . But it need not be tolerated when the alternative exists of submitting an issue to multiple juries constituting in the aggregate a much larger and more diverse sample of decision-makers. That would not be a feasible option if the stakes to each class member were too slight to repay the cost of suit. . . . But this is not the case. . . . Each plaintiff if successful is apt to receive a judgment in the millions. With the aggregate stakes in the tens or hundreds of millions of dollars, or even in the billions, it is not a waste of judicial resources to conduct more than one trial, before more than six jurors, to determine whether a major segment of [an] industry is to follow the asbestos manufacturers into Chapter 11.26
3. The Gasoline Products problem.
Often a trial plan will propose to solve manageability problems by separating issues for trial before different juries. In analyzing any such proposal, litigants must consider the Seventh Amendment limits on separating issues for trial before different juries. To make trials on the individual issues manageable, the district court in Castano proposed to empanel a class jury to decide the common issues and then use one or more other juries to decide the individual issues, either case-by-case or through trials of groups of individual plaintiffs.27 The Fifth Circuit found in this plan a great risk that the Seventh Amendment's Reexamination Clause would be violated.28
The Reexamination Clause states that "no fact tried by jury, shall be otherwise reexamined in any court of the United States. . . ."29 The court drew from this constitutional guarantee "the general right of a litigant to have only one jury pass on a common issue of fact"30 a principle recognized by the Supreme Court in Gasoline Products Co., Inc. v. Champlin Refining Co.31 Under Gasoline Products, a partial new trial is improper unless the issue to be retried "is so distinct and separable from the others that a trial of it alone may be had without injustice."32 Without this rule, separate juries might render inconsistent verdicts, by passing on issues involving overlapping legal and factual questions. Because the proposed trial plan in Castano created a great risk that the Reexamination Clause would be violated, it also created a great risk of reversible error in the judgments for the absent class members. Under those circumstances, the Fifth Circuit found that "class treatment can hardly be said to be superior to individual adjudication."33
The Castano court's reasoning applies not only to risks of a Seventh Amendment violation, but also to any other risk that a proposed trial plan will inject reversible error into the proceeding, tainting any resulting class judgment. Any such risk precludes a proper finding of superiority.34
4. Other factors that may militate against predominance and superiority.
Though the district court in Castano concluded that a class action would serve the goal of judicial efficiency, the Fifth Circuit found no support for this conclusion. The Fifth Circuit reasoned that in the context of an immature tort, any savings in judicial resources is speculative, and any imagined savings would be overwhelmed by the procedural problems that certification of a sui generis cause of action brings with it.35
The Fifth Circuit also found that without any significant track record with individual trials, the district court could not possibly determine predominance accurately. That, in turn, precluded a finding of the requisite superiority. The defendant's common conduct might prove to be "a minor part of each trial."36 Premature certification would deprive the defendant of the opportunity to present that argument to a court, and would create the risk of decertification after considerable resources had been expended. Better for a district court to base its predominance finding "on the wisdom of ... individual trials,"37 than to risk making the wrong guess on predominance, resulting in decertification after years of litigation. The presence of this risk "prevents a class action from being a superior method of adjudication.38
The analysis the Castano court employed should help those who oppose class certification in cases involving novel claims.
5. Summary of the findings necessary to support superiority.
To establish superiority without a negative-value suit, the class-action proponent must establish the desirability of concentrating litigation in the class forum, by showing that individual lawsuits are placing a substantial burden on the federal judicial system. Even when the conditions for a negativevalue suit exist, the proponent must present a trial plan that is manageable, that will enable the court ultimately to enter a judgment for all class members, and that does not contain a high risk of reversible error.
D. Additional Inquiries Necessary for Rigorous Analysis of a Class Certification Request in a Multi-State Class Action.
Multi-state class-action proposals merit additional scrutiny. To analyze Rule 23(b)(3)'s requirements for predominance and superiority on the state-law claims, the proponent and the district court must decide which state's law applies to the claims proposed for certification. If more than one state's law applies, then the proponent and the court must analyze in detail the effect of variations in the applicable state laws.
Again, Castano and its progeny illustrate the analysis. To assess the effect of variations in state law on predominance and superiority, the district court must analyze choice of law to determine which state's laws apply. This is a threshold inquiry. Unless the district court conducts a proper choice-of-law analysis, it cannot make a proper predominance finding.39
In diversity cases, a federal district court must apply the choice-of-law rules of the forum state.40 The same is true when a federal district court considers state-law claims while exercising supplemental jurisdiction.41 Often the Restatement's "most significant relationship" test applies except when a valid contractual choice-of-law provision controls.42 If the choice-of-law analysis indicates that the laws of several states will apply, the class-action proponent must provide a detailed comparison of the variations in state law.
In Spence v. Glock,43 a 2000 decision, the Fifth Circuit explained these principles, relying on Castano. Under Spence and Castano, the district court must know which law will apply before determining predominance.44 The district court in Spence could not discharge its duty, however, because plaintiffs failed to give that court the information about the policies of other interested states relevant to the choice of law. The Spence court rejected "plaintiffs' attempt to finesse the choice of law by omitting comparison of laws other than Georgia's," because "Castano is predicated squarely on the court's duty to determine whether plaintiffs have born their burden where a class will involve multiple jurisdictions and variations in state law."45 Class-action plaintiffs must provide an extensive analysis of state-law variations to reveal whether they pose insuperable obstacles to certification.46
The district court must analyze choice of law when making the initial decision on certification. In Castano, the district court had conditionally certified a nationwide class on stateÂ–law claims of fraud, negligence, breach of warranty (express or implied), strict liability, and violation of consumer protection statutes. The district court recognized that the laws of various states would apply to those state-law claims but deferred substantive consideration of whether and how variations in state law would affect predominance. The Fifth Circuit, however, rejected the notion that Rule 23(c)(1)'s provision allowing conditional certification obviated the need for predominance analysis:
In a multi-state class action, variations in state law may swamp any common issues and defeat predominance.
* * *
A district court's duty to determine whether the plaintiff has borne its burden on class certification requires that a court consider variations in state law when a class action involves multiple jurisdictions. 'In order to make the findings required to certify a class action under Rule 23(b)(3) . . . one must initially identify the substantive law issues which will control the outcome of the litigation.'47
Spence and Castano demonstrate that it is difficult to establish predominance if the proposed class consists of numerous plaintiffs from a number of states, and the choice-of-law analysis makes the class members' state law claims depend upon their individual citizenship or residence.
V. Other Potential Arguments Against Class Certification
A. Improper Class Definition
The proponent may attempt to avoid some of the preceding problems by narrowing the class definition. But any such attempt may create problems of its own. It is improper to certify a "failsafe class," in which membership rests on the paramount liability question, where by definition, only those absent class members entitled to recover are members of the proposed class. A failsafe class presents two problems. First, class members cannot be identified until after the class trial. Second, the class trial is a one-sided proceedingÂ–if the defendant prevails on the merits, then, by definition, the class has no members, and any judgment entered has no preclusive effect, thus defeating the purpose of a class action.
Consider the following recent case. A consumer class action was filed against Ford Motor Co., alleging that Ford used a defective paint process that resulted in premature paint peeling. The proposed class was defined as all persons who bought certain model Fords who had to pay Ford or one of its dealers "for a paint repair to their48 vehicles to repair peeling or flaking paint caused by a defective paint process ...." The Supreme Court of Texas, which looks to federal decisions for guidance, held this class definition improper. The inclusion of the defective paint process as an element of the class definition impermissibly required a determination of the merits before the court could ascertain whether a given person is a class member. Were the defendants to prevail at trial, the proposed class would have no members, and no automobile purchasers would be bound by the judgment.49
As this case demonstrates, a properly defined class is imperative. Clearly defining a class identifies the plaintiffs who will be bound by the judgment if they lose and insures that those actually harmed by the defendant's wrongful conduct will receive the relief ultimately awarded.50 For a class to be sufficiently defined, it must be precise: the class members must be ascertainable by reference to objective criteria.51
B. Lack of Standing
Sometimes a proposed class certification may fail because the proposed class representative lacks individual standing. The Supreme Court has held that a plaintiff who lacks individual standing when suit is filed cannot maintain a class action: "[I]f none of the named plaintiffs purporting to represent a class establishes the requisites of a case or controversy with the defendants, none may seek relief on behalf of himself or any other member of the class."52 "That a suit may be a class action . . . adds nothing to the question of standing, for even named plaintiffs who represent a class 'must allege and show that they personally have been injured, not that injury has been suffered by other, unidentified members of the class to which they belong and which they purport to represent."53
A class representative's lack of standing may be either a total or a partial bar to a proposed class action. If the proposed class representative lacks standing to bring all of the proposed class claims, the court lacks power to adjudicate the case, and the court should dismiss the case for want of jurisdiction.54 If the proposed class representative has individual standing to assert some of the proposed class claims, the court should dismiss those claims in which the class representative has no standing and analyze the remaining claims for certification under Rule 23.55
Though they are related, standing is distinct from the typicality and adequacy requirements of Rule 23(a). Standing is a prerequisite to subject-matter jurisdiction. Typicality and adequacy deal with the competence of a plaintiff to represent the class. Before establishing competence to represent a class, a plaintiff must first meet the threshold requirement of individual standing to bring the claims that are proposed for certification.
C. Rule 23(a) Requirements
The numerosity requirement provides that the class be "so numerous that joinder of all members is impracticable." "Impracticable" does not mean "impossible." Ordinarily, the class proponent need only show that it is difficult or inconvenient to join all members of the class.56 Proposed classes of less than twenty have been held to meet the numerosity requirement.57 In most cases, arguing about numerosity is wasted effort.
Rule 23(a)'s commonality requirement requires a demonstration that "questions of law or fact common to the class" exist. Some cases set a low threshold for commonality.58 In fact, a single issue of either fact or law common to all class members may suffice.59
The class-action proponent will always be able to identify some common issues of law or fact. But that is only the beginning of the predominance and superiority inquiries. Class-certification opponents would do better to move directly to Rule 23(b)(3)'s predominance and superiority analysis rather than to argue against the existence of commonality under Rule 23(a).
To satisfy the typicality requirement, the proposed class representatives must have interests "substantially aligned" with those of the absent class members.60 The class plaintiff does not have to show that the claims are identical to those of other class membersÂ–only that they are substantially similar. To determine typicality, the court assesses whether the named plaintiff has incentives aligned with those of absent class members to ensure that the absentee's interests are protected.61
As noted above, typicality under Rule 23(a) is a separate inquiry from standing, though a number of decisions lump the two together. In most cases, if the proposed class representative has standing as to all proposed class claims, the opponent will have difficulty defeating a proposed class certification for lack of typicality.
Rule 23(a)'s fourth requirement is that the representative plaintiff fairly and adequately protect the interests of the class. Two distinct concepts are involved in the adequacy requirement: (1) the absence of antagonism between the proposed class representative and the absent class members; and (2) the assurance that the representative, through class counsel, will vigorously prosecute class claims.62 If the proposed class representative has standing to assert all of the proposed class claims, the opponent will have difficulty arguing effectively that the proposed certification fails for lack of adequacy. And if class counsel can demonstrate at least a modicum of experience with class-action litigation, the opponent will have difficulty defeating class certification on that ground.
Despite these considerations, the opponent may demonstrate inadequate representation by showing that class counsel has structured the proposed class action to maximize the chances for certification and realization of an award of attorneys' fees. Ethical issues may exist that class counsel will have difficulty addressing.
VI. Availability of Interlocutory Appeal of an Order Granting Class Certification
Until now, we have focused on the substantive law governing class certification in both the district court and appellate court. Now we turn our focus exclusively to the appellate courts, and how to obtain interlocutory relief there if the trial court certifies a class action.
As a result of the 1998 amendments to Rule 23, the courts of appeals may, at their discretion, review a district court's decision to grant or deny class certification.63 Following this change, the federal appellate courts have developed standards for deciding which certification decisions merit interlocutory review.
The Seventh Circuit first articulated such standards in Blair v. Equifax Check Services, Inc.64 Since then, the First, Second, Third, Fourth, Sixth, Eleventh, and D.C. Circuits have considered the issue, generally adopting or refining the Seventh Circuit's analysis in Blair.65 Many states have rules identical to the federal rule; accordingly, federal standards apply in most state courts. And some states have adopted rules explicitly permitting interlocutory review of class certification decisions.
A. Standards for Obtaining Interlocutory Review of Class Certification Decisions in Federal Court
The Seventh Circuit first interpreted the new rule concerning interlocutory appeal of class certification decisions. The court rejected a bright-line approach to determining whether to grant review. Instead, it described three categories of cases it found particularly suited to interlocutory review, given the rationale behind Rule 23(f).66 Writing for the court, Judge Easterbrook described these cases as follows:
(1) so-called "death-knell" cases, in which "denial of class status seems likely to be fatal, and when the plaintiff has a solid argument in opposition to the district court's decision";
(2) cases in which class certification puts tremendous pressure on a defendant to settle, even when the plaintiff's probability of success on the merits is slight; and
(3) cases in which an appeal may facilitate the development of the law, specifically cases in which fundamental questions may escape resolution because the case may settle or be resolved in a way that avoids such procedural issues.67
In the first two categories, the party appealing the district court's certification decision must show that the judge's decision was questionable. But in the third category, "it is less important to show that the district judge's decision is shaky."68 This Seventh Circuit standard remains mostly intact and has been largely adopted by the other circuits, although those courts have since expanded on the Seventh Circuit's analysis.
The next court to address the issue, the First Circuit, generally agreed with the Seventh Circuit's standard. The court, however, believed that the third category "may encourage too many disappointed litigants to file fruitless Rule 23(f) applications." It therefore restricted that category to include only "those instances in which an appeal will permit the resolution of an unsettled legal issue that is important to the particular litigation as well as important in itself and likely to escape effective review if left hanging until the end of the case."69
To address additional considerations that might weigh against a broad exercise of the interlocutory review power, the Eleventh Circuit subsequently built on Blair and Mowbray in Prado-Steiman v. Bush.70 As articulated by the Eleventh Circuit, the following considerations should influence a court's decision to grant appellate review:
(1) the likelihood that the district court's ruling will be a "death knell" for either plaintiff or defendant;
(2) substantial weakness in the certification decision, amounting to an abuse of discretion;
(3) the existence of an unsettled legal issue, both generally important and important in the case before the court;
(4) the nature and status of the litigation; and
(5) the likelihood that future events may make immediate appellate review more or less appropriate.71
According to the court, the second factor should be judged on a "sliding scale": the stronger the petitioner's showing of abuse of discretion under the second factor, the less it needs to rely on the other factors.72 The Fourth Circuit adopted the Prado-Steiman test and its sliding-scale approach in Lienhart v. Dryvit Systems, Inc., noting that the Eleventh Circuit had actually broadened the grounds for interlocutory review.
Most circuits have adopted the same basic standard, although some have articulated their standards in a slightly different way. The Third Circuit, for example, established its own formulation, based on its review of the Advisory Committee Notes and the decisions of the other circuits that had considered the issue. According to the Third Circuit, appellate courts should be guided by the following principles:
(1) whether the decision has a "death knell" effect on the plaintiff;
(2) whether certification places undue pressure on defendants to settle the case to avoid the risk of tremendous liability;
(3) whether interlocutory appeal would facilitate the resolution of new or unsettled questions of law; and
(4) whether the ruling was erroneous.73
The Second Circuit, agreeing with the other courts of appeals, adopted a similar test. According to that court, a petitioner seeking appellate review under Rule 23(f) must show that:
(1) the decision would effectively end the litigation and that the decision was questionable; or
(2) a "compelling need" exists for immediate resolution of a legal question presented by the decision.74
Finally, the D.C. Circuit determined that interlocutory review would be appropriate when the certification decision:
(1) creates a "death-knell" situation for either the plaintiff or the defendant and the district court's decision is questionable;
(2) presents an unsettled legal issue that is unlikely to be resolved otherwise; or
(3) is manifestly erroneous.75
To date, these are the only circuits to clarify the interlocutory powers granted by Rule 23(f).
Although the standards the various circuits have articulated do not differ greatly, some distinctions exist. The First, Second, Seventh, and D.C. Circuits, for example, generally favor interlocutory review when the district court's decision raises an unsettled legal issue that is unlikely to be resolved absent an appeal, even when the petitioner has not made a strong showing that the trial court erred. Additionally, the Third, Fourth, Eleventh, and D.C. Circuits will consider granting interlocutory review when the district court's decision is manifestly erroneous, even when the decision does not create a death-knell situation for the plaintiff or defendant. The distinctions may arise from the courts' views concerning the purpose behind the rule. All of the circuits agree, however, that, while a bright-line approach is undesirable, review should be granted sparingly in cases that do not fit within one of the enumerated categories.
B. Interlocutory Review of Class Certification Decisions in State Courts
Many states have rules similar to Rule 23, and the federal standards should apply in the courts of those states. Some state courts have already looked to this body of federal jurisprudence for guidance. The Supreme Court of Minnesota, for example, specifically adopted a synthesis of the guidelines outlined by the federal circuits in determining whether to grant interlocutory review of a class certification decision.76 The state rule did not specify that class certification orders per se were appropriate for interlocutory review but allowed discretionary review of interlocutory orders in general. The court stated that it would look to federal law for guidance because "the federal jurisprudence in this area is recent and well-developed."77 Other states have noted that the federal standard is consistent with their approach; they allow interlocutory review in some cases, including those in which they find that the trial court has abused its discretion.78 Additionally, some states have enacted legislation expressly permitting interlocutory review of class certification decisions. Texas, for example, provides that a party may appeal a district court's decision to certify or refuse to certify a class to that state's intermediate appellate courts.79 Other states, however, continue to follow the Supreme Court's reasoning in Coopers & Lybrand v. Livesay,80 and hold that class certification decisions are not immediately reviewable except in very narrow circumstances.81
C. Standard of Appellate Review in Federal Court.
A federal appellate court reviews a district court's class certification decision under an abuse-of-discretion standard.82 This standard, however, is somewhat "flexible."83 In general, federal appellate courts give great deference to a trial court's factual determinations. But trial courts must properly apply the law, and an appellate court does not defer to the trial court's legal determinations.84 And even review for abuse of discretion may involve an inquiry into whether the district court's discretion was exercised within the proper legal boundaries.85 Thus, it is generally far more productive to craft appellate arguments attacking the trial court's class certification as an improper application of the appropriate legal standard.
The trial court's certification order must incorporate a trial plan defining how the claims of the absent class members will be adjudicated through the trial of the class representative's case. That trial plan may be the one offered by the proponent, or it may be the trial court's modification of that plan. If the trial court's certification order is not based on a trial plan that adequately defines the process of proposed adjudication, the trial court has abused its discretion by failing to perform the requisite analysis.
Similarly, if the class is not sufficiently ascertainable by reference to objective criteria, the trial court has abused its discretion. If, under the proposed trial plan, the class representative's trial will not produce answers to the jury questions that will conclusively determine all, or a substantial portion of, the essential elements of each of the claims of every absent class member, the trial court has abused its discretion. If, under the proposed trial plan, there will be no opportunity for adequate discovery and a jury trial on an essential element of any of the claims of each absent class member, the resulting final judgment or judgments will inevitably contain reversible error. Certification would then be deemed an abuse of discretion because a class action would not be a superior method of adjudication.
All of these arguments are essentially the same as the ones that will have been made in the trial court in opposing class certification. Thus, on these points, the appellate brief will not be materially different from the brief in opposition filed in the trial court. The testimonial evidence presented at the class certification hearing typically relates primarily to the characteristics of the individual plaintiff and the experience and expertise of proposed class counsel. If there is little chance of defeating class certification on the issue of typicality and adequacy of the class representative, or lack of experience or expertise of class counsel, there is relatively little evidence needed to produce an adequate appellate record.
The preceding analytical framework should enable defense counsel to develop an effective attack against any proposed trial plan that seeks to aggregate the claims of a large number of persons when issues of individual causation and damages exist. More importantly, however, the analysis does not depend upon the plaintiff's proposal.
In any proposed certification, the opponent can analyze the class definition for legal sufficiency. If the class definition is legally sufficient, the opponent can analyze the likely jury issues presented for trial in the cases of the absent class members, to formulate the jury issues that can be submitted in the class representative's case, and to ascertain whether the answers to those jury issues will enable the trial court to enter a final judgment in the cases of the absent class members. Unless all those things are achievable in a manageable proceeding, class certification is improper.
- Wente v. Georgia Pac. Corp., 712 S.W.2d 253, 256 (Tex. App. 1986) (quoting Amoco Prod. Co. v. Hardy, 628 S.W.2d 813, 816 (Tex. App. 1981).
- Rule 23(a) provides:
(a) Prerequisites to a Class Action. One or more members of a class may sue or be sued as representative parties on behalf of all only if (1) the class is so numerous that joinder of all members is impracticable, (2) there are questions of law or fact common to the class, (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and (4) the representative parties will fairly and adequately protect the interests of the class."
- Rule 23(b)(3) provides:
(3) the court finds that the questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy. The matters pertinent to the findings include: (A) the interest of members of the class in individually controlling the prosecution or defense of separate actions; (B) the extent and nature of any litigation concerning the controversy already commenced by or against members of the class; (C) the desirability or undesirability of concentrating the litigation of the claims in the particular forum; (D) the difficulties likely to be encountered in the management of a class action.
- See General Tel. Co v. Falcon, 457 U.S. 147, 161 (1982); Castano v. Am. Tobacco Co., 84 F.3d 734, 740 (5th Cir. 1996).
- See Gulf Oil Co. v. Bernard, 452 U.S. 89, 100 (1981); Castano, 84 F.3d at 740.
- See Castano, 84 F.3d at 740; Horton v. Goose Creek Ind. Sch. Dist., 690 F.2d 470, 486 (5th Cir. 1982); In re Am. Med. Sys., 75 F3d 1069, 1086 (6th Cir. 1996) (holding that the district court erroneously reversed the proper burden of proof by asking the defendants to show cause why certification was not warranted).
- FED. R. CIV. P. 23(b)(3).
- 84 F.3d 734 (5th Cir. 1996).
- Id. at 738.
- Id. at 739.
- 84 F.3d at 745 (citing Jenkins v. Raymark, Indus., 782 F.2d 468 (5th Cir. 1986) and Eisen v. Carlisle & Jacquelin, 417 U.S. 156 (1974)).
- See Spence v. Glock, Ges. M.B.H., 227 F.3d 308, 313 (5th Cir. 2000) ("The district court here could not discharge its duty because plaintiffs did not supply adequate information in the policies of other interested states relevant to the choice of law. Nor did the plaintiffs provide the court with a sub-class plan in case the court disagreed that Georgia law controlled."); Allison v. Citgo Petroleum Corp., 157 F.3d 402, 420 n.15 (5th Cir. 1998) ("Without any help from the plaintiffs, the district court did not abuse its discretion in not attempting to devise a workable subclassing plan of its own.").
- 84 F.3d at 744 (footnote omitted).
- Id. at 745.
- See Id. at 744 ("The district court's second error was that it failed to consider how the plaintiffs' additional claims would be tried individually or on a class basis.").
- See Jackson v. Motel 6 Multipurpose, Inc., 130 F.3d 999, 1006 (11th Cir. 1997) (finding common issue of whether Motel 6 had a pattern or practice of racial discrimination not predominant because "'as a practical matter, the resolution of this overarching common issue breaks down into an unmanageable variety of individual legal and factual issues."') (quoting Andrews v. Am. Tel. & Tel. Co., 95 F.3d 1014, 1023 (11th Cir. 1996)).
- See Cimino v. Raymark Industries, Inc., 151 F.3d 297, 311-12 (5th Cir. 1998); In re Fibreboard Corp., 893 F.2d 706, 711-12 (5th Cir. 1990); Alabama v. Blue Bird Body Co., 573 F.2d 309, 318-19 (5th Cir. 1978).
- See Cimino, 84 F.3d at 750-51; Blue Bird Body Co., 573 F.3d at 318-19.
- FED. R. CIV. P. 23(b)(3).
- 84 F.3d at 747.
- Id. at 747-748.
- Id. at 748.
- Amchem, 521 U.S. at 615.
- 84 F.3d 748 (quoting In re Rhone-Poulenc Rorer, Inc., 51 F.3d 1293, 1300 (7th Cir. 1995)).
- See 84 F.3d at 750.
- Id. at 751.
- U.S. CONST. amend. VII.
- 84 F.3d at 750 (quoting Alabama v. Blue Bird Body Co., 573 F.2d 309, 391 (5th Cir. 1978).
- 283 U.S. 494 (1931).
- 84 F.3d at 750 (quoting Alabama v. Blue Bird Body Co.)
- Id. at 751.
- See Cimino, 151 F.3d at 312 (after noting that the Seventh Amendment is not altered simply because the case is a Rule 23(b)(3) class action; stating: "Similarly, use of Rule 23(b)(3) or 42(2) does not alter the required elements which must be found to impose liability and fix damages Â– or the identity of the substantive law . . . which determines such elements.")
- 84 F.3d at 749.
- See Spence v. Glock, Ges.m.b.H., 227 F.3d 308, 311 (5th Cir. 2000).
- See Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U. S. 487, 496 (1941).
- See United States v. Reid & Gary Strickland Co., 161 F.3d 915, 919 (5th Cir. 1998); Landy v. A-Able Binding Co., 75 F.3d 200, 205, n.7 (5th Cir. 1996).
- See Duncan v. Cessna Aircraft Co., 665 S.W.2d 414, 421 (Tex. 1984); Gutierrez v. Collins, 583 S.W.2d 312, 318 (Tex. 1979)).
- 227 F.3d 308 (5th Cir. 2000).
- Id. at 313 (citing Castano, 84 F.3d at 741).
- Id. at 313 (citing Castano at 744).
- Id. at 313 (citing Walsh v. Ford Motor Co., 807 F.2d 1000, 1017 (D.C. Cir. 1986) (opinion by then-Judge Ginsburg)).
- 84 F.3d at 741 (quoting Alabama v. Blue Bird Body Co., 573 F.3d 309, 316 (5th Cir. 1978)).
- Ford Motor Co. v. Sheldon, 22 S.W.3d 444, 448 (Tex. 2000) (emphasis added).
- See Id. at 454.
- See Simer v. Rios, 661 F.2d 655, 670 (7th Cir. 1981).
- See DeBremaecker v. Short, 433 F.2d 733, 734 (5th Cir. 1970) (noting it is "elementary that in order to maintain a class action, the class sought to be represented must be adequately defined and clearly ascertainable."); Newton v. S. Wood Piedmont Co., 163 F.R.D. 625, 632 (S.D. Ga. 1995); Gomez v. Illinois State Bd. of Educ., 117 F.R.D. 394, 397 (N.D. Ill. 1987); Joseph v. General Motors Corp., 109 F.R.D. 635, 639 (D. Colo. 1986).
- O'Shea v. Littleton, 414 U.S. 488, 494 (1974).
- Simon v. E. Ky. Welfare Rights Org., 426 U.S. 26, 40 n.20 (1976) (quoting Warth v. Seldin, 422 U.S. 490, 502 (1975)).
- See M.D. Anderson Cancer Center v. Novak, 52 S.W.3d 704 (Tex. 2001) (applying Texas law, but relying on federal precedents).
- See, e.g., O'Shea v. Littleton, 414 U.S. 488, 504 (1974); James v. City of Dallas, 254 F.3d 551, 568-69 (5th Cir. 2001); Hassine v. Jeffes, 846 F.2d 169, 176 (3d Cir. 1988).
- 7A CHARLES ALLEN WRIGHT, ARTHUR MILLER & MARY KAY KANE, FEDERAL PRACTICE AND PROCEDURE § 1762 at 159 (2d ed. 1986).
- See Folsom v. Blum, 87 F.R.D. 443, 445 (S.D.N.Y. 1980) (certifying a class of 14 members).
- See Baby Neal ex rel. Kanter v. Casey, 43 F.3d 48, 56 (3d Cir. 1994) (commonality requirement not demanding because requirement may be satisfied by a single common issue); Becher v. Long Island Lighting Co., 164 F.R.D. 144, 150 (E.D.N.Y. 1996) ("The standard for meeting the Rule 23(a)(2) requirement is qualitative rather than quantitative Â– that is, there need only be a single issue, to all members of the class."); Scholes v. Stone, McGuire & Benjamin, 143 F.R.D. 181, 185 ("Commonality requirement has been characterized as a 'low hurdle' easily surmounted.").
- See Suncoast Resources, Inc. v. Cooper, 967 S.W.2d 525, 532 (Tex. App. 1998); Microsoft Corp. v. Manning, 914 S.W.2d 602, 611 (Tex. App. 1995).
- In re: Am. Med. Sys., Inc., 75 F.3d 1069, 1083 (6th Cir. 1996); Baby Neal ex rel. Kanter v. Casey, 43 F.3d 48, 57 (3d Cir. 1994) ("The typicality inquiry is intended to assess whether Â… the second plaintiffs have incentives that align"); Spenser v. Central States, SE & SW Areas Pension Fund, 778 F.Supp. 985, 989 (N.D. Ill. 1991).
- Prudential, 962 F. Supp. at 515 (citing Baby Neal ex rel. Kanter v. Casey, 43 F.3d 48, 57-58 (3d Cir. 1994).
- See Berger v. Compaq Computer Corp., 257 F.3d 475, 480-84 (5th Cir. 2001); Kirkpatrick v. J. C. Bradford & Co., 827 F.2d 718, 727 (11th Cir. 1987), cert. dend., 485 U.S. 959 (1988).
- Rule 23(f) now provides:
A court of appeals may in its discretion permit an appeal from an order of a district court granting or denying class action certification under this rule if application is made to it within ten days after entry of the order. An appeal does not stay proceedings in the district court unless the district judge or the court of appeals so orders.The Committee Note to this rule adds, "[t]he court of appeals is given unfettered discretion whether to permit the appeal, akin to the discretion exercised by the Supreme Court in acting on a petition for certiorari."
- 181 F.3d 832 (7th Cir. 1999).
- See, e.g., Waste Mgmt. Holdings, Inc. v. Mowbray, 208 F.3d 288 (1st Cir. 2000); Plaintiffs Class v. Credit Lyonnais Rouse, Ltd., 262 F.3d 134 (2d Cir. 2001); Newton v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 259 F.3d 154 (3d Cir. 2001); Lienhart v. Dryvit Sys., Inc., 255 F.3d 138 (4th Cir. 2001); In re Delta Airlines, 310 F.3d 953, 959 (6th Cir. 2002); Prado-Steiman v. Bush, 221 F.3d 1266 (11th Cir. 2000); In re Lorazepam & Clorazepate Antitrust Litigation, 289 F.3d 98 (D.C. Cir. 2002).
- Blair, 181 F.3d at 834-35.
- Id. at 835.
- Mowbray, 208 F.3d at 294.
- Prado-Steiman, 221 F.3d at 1273. Citing Mowbray, the court noted that it "should err, if at all, on the side of allowing the district court an opportunity to fine-tune its class certification order rather than opening the door too widely to interlocutory appellate review." Id. at 1274.
- Id. at 1274-76.
- Id. at 1275.
- Newton, 259 F.3d at 164-65.
- Credit Lyonnais Rouse, Ltd., 262 F.3d at 139.
- Lorazepam Litigation, 289 F.3d at 105.
- Gordon v. Microsoft Corp., 645 N.W.2d 393, 401 (Minn. 2002).
- Id. at 400.
- See, e.g., Compass Bank v. Snow, 2001 Ala. LEXIS 470 (Ala. 2001); DuhÃ© v. Texaco, Inc., 779 So. 2d 1070 (La. Ct. App. 2001). Other state courts have granted interlocutory review, although without explanation of the grounds for doing so. See, e.g., Benning v. Wit Capital Group, Inc., 792 A.2d 188 (Del. 2001); Weld v. Glaxo Wellcome, Inc., 746 N.E.2d 522 (Mass. 2001).
- TEX. CIV. PRAC. & REM. CODE ANN. § 51.014(a)(3) (Vernon 2002). Other states have enacted rules explicitly allowing appeal of an order granting or denying certification. See, e.g., Ark. R. App. Proc. 2(a)(9).
- 437 U.S. 463 (1978).
- Millett v. Atlantic Richfield Co., 760 A.2d 250, 253-54 (Me. 2000).
- See Steven ALAN CHILDRESS & MARTHA S. DAVIS, FEDERAL STANDARDS OF REVIEW § 4.12 n.1 (3rd ed. 1999) (citing numerous cases)(hereinafter "Childress & Davis").
- See Abrams v. Interco, Inc., 719 F.2d 23 (2d Cir. 1983)("it does no particular harm to say that the district court's grant or denial of class action status will be reversed only for 'abuse of discretion' so long as we understand that this standard itself is flexible").
- See City of Dallas v. James, 254 F.3d 551, 562 (5th Cir. 2001); Allison v. Citgo Petroleum Corp., 151 F.3d 402, 408 (5th Cir. 1998).
- CHILDRESS & DAVIS, supra note 82, § 4.12.
G. Luke Ashley is a member of Thompson & Knight LLP, in Dallas, Texas. He is board certified in civil appellate law, civil trial law, and personal injury trial law by the Texas Board of Legal Specialization. He is also a member of the DRI, the Texas Association of Defense Counsel, the State Bar of Texas, and the American Bar Association.