Overview

Court system

Outline the organisation of your court system as it relates to collective or representative actions (class actions). In which courts may class actions be brought?

The judicial system in the United States is divided into federal courts and state courts. The federal court system has three levels: the trial courts, known as the US District Courts; the intermediate appellate courts, known as the US Courts of Appeals; and the high court, known as the US Supreme Court. The composition of the state court systems varies by state, but most states mirror the three-level federal system.

The district courts are divided across 94 geographic districts. There is at least one district court in each of the 50 states and in the District of Columbia. Four territories of the United States also have district courts: Puerto Rico, the Virgin Islands, Guam and the Northern Mariana Islands. There are 13 courts of appeals and 12 of these are organised into regional circuits and hear cases appealed from the district courts within that circuit. The 13th court, the Court of Appeals for the federal circuit, has nationwide jurisdiction to hear appeals involving certain specialised issues, including patent cases. The Supreme Court is the highest court in the US system and has jurisdiction over all cases brought in federal court, as well as any case brought in state court but involving federal law. Supreme Court appellate review is, with few exceptions, discretionary.

Class actions can be litigated in state or, if there is a basis for federal subject matter jurisdiction, in federal court. There is federal subject matter jurisdiction if the case raises a federal question (eg, if it asserts claims arising under federal law; United States Code (USC) Chapter 28 section 1331) or if there diversity in citizenship (USC Chapter 28 section 1332). Under the general rule, there is diversity jurisdiction where the matter in controversy exceeds US$75,000 and is between citizens of different states. These rules resulted in many class actions being litigated in state courts often perceived to be less favourable to defendants. However, in 2005, the United States Congress passed the Class Action Fairness Act (CAFA), which expanded the federal courts’ jurisdiction over class actions and mass actions (cases that are not class actions but that involve 100 or more individual plaintiffs and common questions of law or fact) in several ways. Since CAFA’s enactment, there has been an overall increase in the number of class actions originally filed in or removed to federal courts.

As explained in question 11, in certain circumstances, separate class actions filed in different district courts may be consolidated before a single federal judge. This occurs, most often, where the class actions involve similar issues and parties and consolidation will promote efficiencies in the litigation and prevent inconsistent decisions.

Frequency of class actions

How common are class actions in your jurisdiction? What has been the recent attitude of lawmakers and the judiciary to class actions?

Class actions are quite common in the United States. It is estimated that more than 10,000 new class actions are filed each year in the federal and state courts.

Lawmakers and the judiciary generally recognise the benefits of the class action procedural device. Class actions are appreciated for the efficiencies they create through the consolidation of multiple suits and the aggregation of individual claims, as well as for providing a mechanism for plaintiffs to pursue - and potentially recover - on claims that would otherwise be too small to justify the expenses of litigation. However, class actions are sometimes criticised by lawmakers and judges for being ‘lawyer-driven litigation’ and for placing inordinate pressure on defendants to settle even weak claims so as to avoid the costs and potentially massive liability associated with class actions.

Legal basis

What is the legal basis for class actions? Is it derived from statute or case law?

By statute, federal courts have jurisdiction over class actions: arising under the Constitution, laws or treaties of the United States (see USC Chapter 28, section 1331); or in which the amount in controversy exceeds the sum or value of US$5 million and any member of the class is a citizen of a state different from any defendant, any member of the class is a foreign state or a citizen subject of a foreign state and any defendant is a citizen of one of the United States, or any member of the class is a citizen of one of the United States and any defendant is a foreign state or a citizen or subject of a foreign state (see USC Chapter 28, section 1332(d)). Class actions conducted in federal court are governed by Rule 23 of the Federal Rules of Civil Procedure (Rule 23).

The legal basis for class actions in state courts varies by state, but most states have an analogue to Rule 23 or have, by common law, adopted similar standards.

Types of claims

What types of claims may be filed as class actions?

Generally, any type of claim can conceivably be brought as a class action, provided the requisite class-action procedural requirements are met. Consumer claims, securities claims, antitrust claims, mass tort and product liability claims, and civil rights claims are commonly brought as class actions.

Relief

What relief may be sought in class proceedings?

Class actions are a procedural device and are generally not supposed to abridge or expand any individual class member’s substantive rights. As a result, in the federal system, there are generally no limitations on the type of relief available in a class action; a class member may be entitled to whatever relief would be available to them in an individual action. This can include monetary damages (including punitive damages), restitution, or injunctive or declaratory relief.

Certain state laws do limit the types of recoveries that can be achieved through a class action. For example, New York’s Civil Practice Law and Rules (CPLR) provides that ‘an action to recover a penalty, or minimum measure of recovery created or imposed by statute may not be maintained as a class action’ unless authorised by the statute creating the penalty (New York’s CPLR, section 901(b)).

Initiating a class action and timing

How is a class action initiated? What is the limitation period for bringing a class action? Can the time limit for bringing a class action be paused? How long do class actions typically take from filing to a final decision?

Class actions are initiated through the filing of a complaint. A putative class action takes no more than a single named plaintiff and a filing fee typically of several hundred US dollars. Under federal law, class action plaintiffs are not required to provide defendants with notice and an opportunity to cure prior to filing a complaint. However, some state substantive laws require that notice and an opportunity to cure be given prior to the filing of a complaint. Accordingly, when asserting state law causes of action, plaintiffs should consult applicable state law on this issue regardless of where the complaint will be filed.

There is no uniform limitation period for claims asserted in class actions. The limitation period (and any tolling of that period) will depend on the underlying claim being asserted. However, the limitation period for purported class members to file a claim is tolled once a purported class action asserting that claim is filed. If the class is not certified (see questions 8 and 10 below), the limitation period begins to run again and class members may assert that claim on an individual (but not a class) basis before the limitation period expires. Certain statutes, including certain federal securities statutes, also include statutes of repose, which are distinct from statutes of limitations, cannot be equitably tolled and are an absolute bar to asserting a claim. The time it takes to adjudicate class actions varies widely depending on the type of claim being asserted and the court in which the action is pending, but, if the action survives a motion to dismiss (ie, it plausibly states a claim for relief), it may last years.