Class Action Lawsuits

Both procedural and substantive aspects are tested in the area of class action lawsuits. This post will cover both. 

A class action lawsuit is distinguished from other types of lawsuits in that in a class action lawsuit, representatives sue on behalf of a group.  There are four requirements that must be met to qualify for a class action lawsuit.

First, there must be so many class members that the traditional rules of joinder would not be practicable. There also must be issues in common to all class members. It also must be true that the class representative's claim are typical of the claims of the class. Lastly, the class representative must fairly and adequately represent the class. 

If the four requirements above are satisfied, next is to ensure that the action falls within an acceptable type of class action lawsuit. There are 3 acceptable types. In type 1, class treatment is necessary to avoid prejudice either to class members or to non class members. In type 2, the class action seeks an injunction or declaratory judgment because defendant treated all class members alike. In type 3, common questions must predominate over individual questions, and, thus, a class action is the more appropriate method to handle the dispute. More to say on this third one in a bit. 

Procedurally, a case is not a class action until the court grants the motion to certify it as a class action. Likewise, the court must define the class ( along with class claims, issues, and defenses) and appoint class counsel who must fairly and adequately represents the interests of the class. An immediate appeal as to the court's decision on certification (an interlocutory appeal) is allowable.

In a type 3 class action lawsuit (and only in that type), the court must notify class members that they are in a class. The purpose of the notice is to allow reasonably identifiable members of the class to opt out. The notice informs the members that they will be bound by the judgment if they don't opt out, and that they can enter a separate appearance through counsel. 

Settlement of class action lawsuits vary a bit from settlement of non class action lawsuits. Court approval is required to settle, and the court must give notice to the class members to get feedback on whether the case should be settled or dismissed. In a type 3 class action lawsuit, the court also might refuse to approve the settlement unless members are given another opportunity to opt out. 

There are a few nuances to understand about subject matter jurisdiction in class action lawsuits. Federal question jurisdiction is the same as it is for non class action lawsuits. If jurisdiction is based on diversity, only the citizenship of the class representative is considered and only the class representative's claim must exceed $75,000. 

Also worth noting is the Class Action Fairness Act ("CAFA"). Under CAFA, a federal court can hear a class action (regardless of federal question or diversity jurisdiction) if there are at least 100 class members,  any class member (not just the representative) is of diverse citizenship from any defendant, and the aggregated claims of the class exceed 5 million dollars. And under CAFA, any defendant (even one domiciled in the state where the case is brought) may remove the case from state to federal court