Class formation

Standing

What are the standing requirements for a class action?

To have constitutional standing to have a claim heard by a federal court, class action plaintiffs must have suffered an ‘injury in fact’, that is, a concrete, particularised harm that is actual or imminent, not conjectural or hypothetical. The alleged injury must be traceable to an action taken by the defendant(s) and redressible by a favourable decision on the merits. In the class action context, named plaintiffs must be able to assert the same claims as the proposed class and have suffered the same alleged injury as the proposed class. To have standing to seek prospective injunctive relief, the named plaintiff(s) must generally also be at risk of future harm; allegations of past harm alone generally do not suffice.

Third-party standing is generally prohibited in US courts, but can occur if:

  • the litigant has suffered his or her own injury-in-fact;
  • the litigant has a close relationship to the third party whose rights the litigant is seeking to assert or enforce; and
  • the third party’s ability to protect his or her own interests is hindered.

 

In some cases, public officials, can bring actions similar to class actions – parens patriae actions – on behalf of citizens of their state. Parens patriae actions are not class actions and are subject to their own unique procedural and substantive requirements.

Participation

Do members of a class have to opt in or opt out of the action? Are class members notified that an action has been commenced on their behalf and, if so, how?

Under Rule 23 (and most state class action rules), where a court certifies a class seeking monetary relief, class members are automatically part of the class unless they affirmatively ‘opt out’. Rule 23 class actions that seek to prevent inconsistent adjudications that establish incompatible standards of conduct for defendants or distribute a limited fund or which request injunctive or declaratory relief do not have ‘opt in’ or ‘opt out’ procedures because the court’s ruling will necessarily impact all class members.

When a class action is initially filed, notice is not provided to putative class members that an action has been commenced on their behalf. Class members, however, are required to be notified when a class action brought under Rule 23 seeking monetary relief has been certified (ie, that a court has found that it meets the requirements to be filed as a class action). The notice must be the ‘best notice that is practicable’, and often involves a combination of information sent directly to known class members, as well as descriptions of the class action in newspapers or other periodicals. For Rule 23 class actions that do not seek monetary relief, the court may require that notice be given when a class is certified, but it is not required.

Certification requirements

What are the requirements for a case to be filed as a class action?

For a case to be asserted as a class action in federal court, a plaintiff must allege, and then show by a preponderance of the evidence, that all four of the requirements of Rule 23(a) are met, and that the action meets the requirements of at least one of the three types of class actions identified in Rule 23(b). Many courts also impose an ‘ascertainabililty’ requirement, which means that members of the class must be identifiable by objective criteria and, in some jurisdictions, a reliable and feasible of way of determining who meets the criteria.

The four requirements of Rule 23(a) are:

  • numerosity: that the class is so numerous that joinder of all members is impracticable (whether this requirement is met depends on specific facts and circumstances, but generally a class of 40 or more is sufficient);
  • commonality: that there are questions of law or fact common to the class;
  • typicality: that the claims or defences of the representative parties are typical of the claims or defences of the class; and
  • adequacy: that the named plaintiff and his, her or its counsel will fairly and adequately protect the interests of the class.

 

The three types of class actions identified in Rule 23(b) are:

  • inconsistent adjudication or limited fund actions: these can be brought as class actions where separate actions would create a risk of:
    • inconsistent or varying adjudications that would establish incompatible standards of conduct for defendants; or
    • substantially impairing or impeding class members ability to protect their interests because an adjudication of individual class members rights would, as a practical matter, be dispositive of the interests of other class members;
  • injunctive or declaratory relief actions: these can be brought as class actions where defendants have acted or refused to act on grounds that apply generally to a class, so that injunctive or declaratory relief concerning the class as a whole is appropriate; and
  • monetary actions: these are the most common type of class actions and can be brought as class actions where questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.

 

The state law requirements are generally similar to these federal rules because most states have a rule that mirrors Rule 23.

How does a court determine whether the case qualifies for a class action?

Typically, a plaintiff will file a motion to certify an action as a class action. Rule 23(c) provides that at ‘an early practicable time’ the court must determine whether to certify an action as a class action. But, in practice, it can take more than a year for a plaintiff to file a motion for class certification, often after discovery is completed, because a plaintiff has the burden to show, by a preponderance of the evidence (mere allegations will not suffice), that all four of the requirements of Rule 23(a) are met, that the action meets the requirements of at least one of the three types of class actions identified in Rule 23(b), and that the class is ‘ascertainable’. This inquiry cannot focus solely on whether the plaintiffs’ claims satisfy the Rule 23 requirements, but whether the defendants’ defences satisfy them, too. Defendants will often times oppose a plaintiff’s motion for class certification, and the court will usually, but is not required to, hold a hearing on the issue of class certification and issue a written decision.

Consolidation

Is there a process for consolidating multiple class action filings?

Yes. If multiple class actions involving the same issues or parties are filed in the same trial court, the cases can be consolidated through a notice of related cases or a formal motion for consolidation. If multiple class actions involving the same issues or parties are filed in different district courts, the cases may be consolidated for pretrial proceedings by the Judicial Panel on Multidistrict Litigation (JPML) under United States Code Chapter 28, section 1407 if the JPML concludes that the various class actions involve ‘one or more common questions of fact’ and that consolidation ‘will promote the just and efficient conduct of such actions’. Consolidation under section 1407 can be initiated by the JPML on its own initiative or by a party to a class action through motion practice. If the JPML orders consolidation, the related class actions will be transferred to a single district court and organised into one multi-district litigation. The state courts have similar procedures available for the consolidation of related class actions.