United States: Revised Rule 23 Proposals Show Some Promise

Last Updated: October 13 2015
Article by Andrew J. Trask

The Rule 23 amendment process has continued apace. For those of you who did not read Paul Karlsgodt's excellent summary of the September 11 mini-conference (which included a number of class-action luminaries from both sides of the aisle), I'd recommend you head straight over to do so.

For the mini-conference, the Rule 23 Subcommittee published its latest thoughts on various topics(click on "Mini Conference Materials), and these are the latest versions of its proposals to debate.

In general, the proposals have improved significantly. It's clear that the Subcommittee is listening to reactions from all sides as part of its barnstorming tour. That doesn't mean that there's not further room for improvement, however. Without further ado, here are the latest area of debate, and my thoughts on each. [Disclosure: I assisted in the drafting of some language for both the DRI's and LCJ's responses. The following are my personal reactions.]

(1) Disclosuresregardingproposed settlements (aka"front-loading"). Front-loading (sticking as much information about a class settlement in front of the court as early as possible) is an interesting idea, and it certainly offers what appears today to be a comprehensive list of things the parties should tell the court. The only question I have is whether enshrining a laundry list in the rule will freeze the inquiry, allowing later practice to evolve around these disclosure requirements? Lawyers act strategically. Give them a list of required disclosures, and they'll grumble, disclose everything, and move the real conversation to things not on the list. But I certainly think this goes in the right direction. And if I had a good answer to the "lawyers are strategic" problem, I would be running the legal system instead of just blogging about it.

(2) Expandedtreatmentof settlementcriteria. Unlike some of my defense colleagues, I'm generally for this amendment, which would take the various Circuit's laundry lists of factors and distill them into a single non-exhaustive list of best practices. I think that rationalizing the various Circuit approaches is not a bad idea. (I was further convinced after the Duke conference, in which several of the Subcommittee members pointed out the Rule exists in part to educate the lawyer new to the subject matter.) Of course, as you might guess, I believe the more rigor the better in terms of requiring findings, so I'd opt for the Subcommittee's more rigorous approach.

(3) Cypresprovisions insettlements. The Reporter's notes point out that there is still an open question as to whether this provision is "necessaryand/ordesirable." I'd say it's not. The Reporter has one of my arguments nailed: the courts are already wading into this area, and they're doing a pretty good job of spotting abuses. Given that, and given there is a serious (if under-credited) argument that cy pres relief violates the Rules Enabling Act and therefore the Constitution, I think it's better not to enshrine any approach into the Rule itself. (Proponents continue to argue that there's no Constitutional problem where the plaintiffs and defendants have agreed to the relief. Of course, we are talking about plaintiffs who do not yet represent a class, and defendants who just want the lawsuit done. There is no mechanism for protecting the absent class member there.)

(4)Objectors. As the Duke conference madeclearyet again, objectors are not popular. The question here has been, as all parties describe it, how to separate outthevalid objections from the quick cash-grabs. The Subcommittee proposes a series of disclosures, including the objector's relationship to her attorney, and any compensation agreement. I'm for this amendment. I'm all for transparency. In fact, I'd go further. I think you could fruitfully require these same disclosures before filing a class action complaint. ("That would discourage complaints!" cry certain proponents. "Huh," I say. "Maybe those aren't the valid class action complaints.")

(5) ClassDefinition& Ascertainability. The Subcommittee hasunveiled its approach to ascertainability, which involves amending Rule 23(c). Bluntly, Ithink this is the wrong approach. Courts treat ascertainability as an implicit "threshold" requirement, like numerosity, commonality, typicality, and adequacy. (In fact, many courts treat it with more rigor than typicality or adequacy.) The "minimalist" approach the Subcommittee is proposing would downgrade ascertainability to a "case management tool" that the judge could discard when inconvenient for certification. Better to just leave it alone under these circumstances.

(6) SettlementClassCertification. This is the infamous "Rule 23(b)(4)" proposal. And I'mstill against it. Idon't care if it's plaintiffs or defendants who propose a categoryof settlement class thatdoesn'thave to meet the predominance requirement: that's a bad idea. The predominancerequirement exists to protect the interests of both defendants subject to litigation, and absent class members. Even if it's occasionally inconvenient for defendants, the due process of absent class members is still important as a policy matter.

(7)IssueClass Certification. This is another area where the Subcommittee isnot certain that an amendment is needed. After doing more extensive research for the Duke conference, I'd say the answer is that an amendment is not only unnecessary, but just a bad idea. Whilethere's a lot of rhetoric about using Rule 23(c)(4) to bypass Rule 23(b)(3), courts aregenerally doing just fine at rejectingattempts to use Rule 23(c)(4) to certify an otherwise uncertifiable class. The Subcommittee's proposed amendments would enshrine an understanding that most courts don't currently share, at least in practice.

(8) Notice. To my knowledge, no one has opposed revising the notice requirement to take account of modern technology. I'm certainly not going to be the one to do it.

(9)Pick-Offand Rule68. TheReporter notes that it's unclear this issue needs any further amedment, particularly given that the Supreme Court will be addressing the issue this Term. And I'd agree with that.

There's still a long process ahead, and, as the Reporters have stressed, it's not clear that there will be any amendment to Rule 23. But it's certainly a process that has raised interesting questions along the way.

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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