I’ve written a little so far about the fact that Rule 23 is likely to undergo revision in the next few years. Last week Judge Robert Michael Dow, who is a member of the Advisory Committee on the Rules of Civil Procedure’s Rule 23 subcommittee, spoke at the annual meeting of Lawyers for Civil Justice. He offered an update on what the Rules 23 subcommittee is looking at reforming (what he referred to as their “study agenda”).
As Judge Dow pointed out, the subcommittee is at the beginning of its review, which he called “stage one of a multi-year process.” In other words, there will be no amendment to Rule 23 until January 2017, at the earliest. The study agenda currently contains six items, although, as you’ll see, at least one of them encompasses a number of hot topics in Rule 23 practice. (And that’s not to say the subcommittee may not add more if suggested by enough parties.)
So enough throat-clearing. What is the subcommittee looking at?
- Settlement class issues. This is the single largest topic that the subcommittee is addressing. As Judge Dow put it, at this point, somewhere between 96% and 99% of certified class actions settle rather than proceeding to trial, so the Rule should really reflect the fact that settlement is the primary endgame in a class action. In addition, most federal judges have made it clear that they would like more guidance about how to conduct settlements. (This makes a great deal of sense. As I’ve observed in the Class Action Playbook, Rule 23(e) provides only three vague factors to consider when evaluating a settlement: is it “fair, reasonable, and adequate”? As a result, different federal circuits have adopted different, cumbersome, multi-factor tests, making settlement a difficult and opaque process. The Rule 23 subcommittee is considering a number of potential reforms. In addition to clearer guidance within the Rule, it is also considering whether it should formally address the controversial issue of cy pres relief, as well as the role the objector should play in class settlements. (For this latter issue, the Rule 23 subcommittee is coordinating with the Appellate Rules subcommittee, since one of the proposed reforms involves appeals bonds.)
- Issues classes. Since the certification of issues classes has come into vogue post-Dukes, a fresh issue has arisen. May a court certify an issues class even if the larger proposed class would not meet Rule 23’s requirements, or is that just an unconstitutional end-run around Rule 23(b)(3)’s predominance requirement? (Professor Laura Hines, who also presented at the meeting, has a great analysis here.) The Rule 23 subcommittee is looking at this issue as well.
- Notice issues. Most parties don’t pay much attention to notice until a class has been certified, and then the primary concern is cost. The Rule 23 subcommittee will consider, among other things, whether advances in technology may make effective notice cheaper, and whether this may require a change in Rule 23’s language.
- Rule 68 and mootness. Judge Dow sits in the Northern District of Illinois, so he referred to this issue asthe “Damasco problem.” There’s no question the Seventh Circuit’s particular ruling has created some peculiar practices in its district courts. It appears the Rule 23 subcommittee is primed to consider how to address these issues. (Judge Dow did not say whether the Rule 23 subcommittee will consider how the cost-limiting provisions of Rule 68 interact with Rule 23.)
- Ascertainability. Many, many courts have referred to Rule 23’s “implicit” ascertainability requirement. It may be time to make it explicit. The Third Circuit has asked the Rule 23 subcommittee to consider whether there should be a formal ascertainability requirement in the Rule. Assuming there should be (and it’s hard to come up with arguments against), the biggest question is what the contours of the requirement will look like. For example,will the recent recognitions of “administrative burden” make it in?
- Merits inquiries. The Supreme Court may have thought that it had finally resolved the question of whether a “rigorous analysis” requires an inquiry into the merits where appropriate when it decided Dukes. It didn’t. Courts still apply varying standards for certification. And it remains an open question whether a given court will allow an early challenge to facially deficient class pleadings. So the Rule 23 subcommittee is also keeping an eye on these issues under the umbrella of the role of the merits in class actions.
What does this all mean for the average practitioner? I’ll be pushing into more depth on some of these issues in the coming weeks to discover just that. But, in the meantime, it certainly means that (a) the class action is far from dead, and (b) for class action practitioners, the next few years are going to be interesting ones.