United States: Employers Beware: Possible Changes May Be Coming To Class Action Rules

Last Updated: September 28 2015
Article by Gerald L. Maatman Jr.

Rule 23 governs class action procedure in federal courts, and interpretation of that rule by the U.S. Supreme Court and lower federal courts drives risks and liabilities that employers face in high-stakes litigation. Being on the receiving end of a workplace class action can have dire consequences for a business. Careers of key company officials as well as market share and stock valuation are often on the line.

Rule 23 case law also evolves in another, yet often overlooked manner – through changes to the rule via amendments effectuated by theFederal Advisory Committee on CivilRules, the committee that evaluates and proposes changes to the Federal Rules of Civil Procedure for consideration by the U.S. Supreme Court. The Rule 23 Subcommittee to theAdvisory Committee on CivilRules is composed of federal judges who suggest possible amendments to the rule every few years. Though the work of the Rule 23 Subcommittee to theAdvisory Committee on CivilRules does not take place in the sunshine of open courtroom proceedings and judicial rulings, its recommendations manifest key litigation issues ruminating through the lower federal courts, and any ultimate changes to Rule 23 adopted by the U.S. Supreme Court can impact class certification dynamics as surely as new judicial decisions.

Recent Rule 23 Subcommittee Meeting

For the past year, the Rule 23 Subcommittee has analyzed possible amendments to the rule and class action procedures. On September 11, 2015, it convened a Conference in Dallas and brought together a small group of federal judges, 4 law professors, and 15 lawyers with very diverse perspectives on class actions. The lawyers came from a wide range of substantive practice areas and included some who act primarily as objectors to class settlements and advocates for consumers and civil rights groups.

I was privileged to be invited to participate in the Conferenceby the Rule 23 Subcommittee. I was the sole defense lawyer at the conference that represents employers in workplace class action litigation.

During the conference, the attendees were encouraged to provide feedback and analysis on a variety of proposals being considered by the Subcommittee. All in all, it made for a lively day of discussion, as well as a window into key class action practice issues.

Rule 23 Issues And Possible Changes

To facilitate the conference, the Subcommittee prepared a series of "sketches" in the form of preliminary rule language that served as guideposts for discussion and analysis at the conference. The topics included settlement approval procedures and criteria; use of cy pres to dispose of residual class settlement funds; a possible new rule codifying the evolving law on the ascertainability of class members; standards for issue certification; the impact of Rule 68 offers on class litigation; and a potential new Rule 23(b) sub-section for settlement-only certification. Advocacy groups representing workers and consumers – The Impact Fund and Public Justice – have previously weighed in with the Committee on a number of these subjects (their comments can be found here and here and here.

Potential changes to Rule 23 relative to class definitions, standards for ascertainability, issue certification, and trial plans/manageability issues received significant attention during the Conference. The "debate" among invitees was lively, robust, and somewhat ideological depending on "which side of the v." the invitee practices on in terms of the plaintiffs' class action bar and consumer advocacy groups and the defense lawyers invited to the Conference.

Most participants acknowledged that not every perceived class certification problem can or should be addressed with a rule change. The federal appellate courts are continuing to sort out some questions (like the impact of Rule 68 offers in class actions – our latest post on that development is here) and a consensus may emerge without the necessity of a rule change.

Next Steps

The Advisory Committee on Civil Rules is scheduled to meet again on November 5-6, 2015, in Salt Lake City, and the Subcommittee's Rule 23 recommendations will be discussed then before ultimate submission of final recommendations to the U.S. Supreme Court. Any changes proposed by the Subcommittee also have to be published for public comment before going to the U.S. Supreme Court for approval.

This all comes against the backdrop of significant class action cases that the U.S. Supreme Court is facing in its upcoming term, and in particular Tyson Foods, Inc. v. Bouaphakeo. The Tyson case presents high-stakes issues for workplace class actions. Tyson seeks reversal of a $5.8 million judgment in favor of meat processing employees who claimed to have worked off-the-clock. It could result in the Supreme Court's first discussion of how the standards for certifying a Rule 23(b) class action apply to wage & hour (and other types of workplace) class actions.

Implications For Employers

Changes to Rule 23 carry the potential for far-reaching consequences for employers.

We will monitor those developments and report on issues of concern and significance for employers. Stay tuned!

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Gerald L. Maatman Jr.
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