This is the second of what will be six posts summarizing my notes of the six presentations at the ABA’s 16th Annual Class Actions Institute held last month in Chicago. For more on this excellent conference, see this October 31, 2012 CAB Post.
Session 2 addressed a topic of great relevance to all class action practitioners, regardless of the subject matter area of practice. It was entitled “The Class Definition That Works . . . or Does It?” Strategies for Pleading and Attacking Class Definitions; The Most Basic and Most Ignored Step in a Class-Action Lawsuits Success or Failure. The panel of academics, judges and practitioners discussed recent developments in the state and federal courts regarding the requirements for a class definition. They also discussed practical tips for plaintiffs in articulating a class definition that will withstand attack at the class certification stage, and practical tips for defendants in defeating class certification by attacking the plaintiff’s choice of class definition. Program Chair Daniel R. Karon moderated the panel discussion, which consisted of The Honorable James G. Carr, Bart D. Cohen, Donald Frederico, Professor Dean Robert Klonoff, Sabrina H. Strong, and Ranae D. Steiner.
Here are some highlights of the pointers made by the panel during the presentation:
- Many courts have accepted several additional elements as implicit under Rule 23 and similar state rules of civil procedure, including that the class definition be sufficiently clear and narrow so that the class is ascertainable and not overly broad. These requirements are implied in order to ensure 1) that the class can be identified from a practical perspective; 2) that the defendant has notice of the claims being made against it and by whom those claims are being made; and 3) that the court can manage the litigation.
- These issues can also be expressed through the other, express Rule 23 elements. For example, if a class is not ascertainable, then there is no basis to conclude that numerosity is present. Similarly, an inability to distinguish class members who have a claim from those who do not should lead the court to conclude that common issues do not predominate.
- Many trial judges would prefer to consider issues relating to the class definition in terms of the express Rule 23 elements rather than by accepting addition, implicit requirements.
- Rather than declining to certify altogether, courts are often willing to work with plaintiffs’ counsel to try to come up with alternative class definitions that resolve problems associated with a class as originally proposed.
- Because most judges are not dealing with these types of issues on a daily basis, the involvement of counsel on both sides is essential to the judge’s well-reasoned evaluation of the potential legal and practical problems with the proposed class definition and whether those problems can be remedied without violating the rights of the defendant or absent class members or overburdening the court.
The panel grouped issues relating to class definitions into various categories. The panel discussed each of these categories in reference to an example case. In many instances, the categories overlap, and the example cases often illustrated more than one of the categories. I have listed below, for each category, the key problems, the example case(s) discussed by the panel, and my notes on insights offered by panelists:
Lack of objective criteria for class membership
Issue – Membership in the class depends on criteria that cannot be established without looking at each class member individually.
Example - Solo v. Bausch & Lomb Inc., MDL No. 1785, 2009 WL 4287706 (D.S.C. Sept. 25, 2009): In class action seeking compensation for the lost value of tainted contact lens solution that purchasers were encouraged to dump out as part of a product recall, class defined as consisting of all purchasers who “lack[ed] full reimbursement” for the value of the solution purchased.
Notes - fixes proposed by panel members included 1) Expand definition to remove individualized issues, e.g. “all who purchased”, but this could create overbreadth problems; 2) create subclasses based on date of purchase, and estimate likely amount of consumption for members in each subclass.
Vagueness
Issue – The class definition is too vague and indefinite to determine who is in the class.
Example - Heisler v. Maxtor Corp., No. 5:06-cv-06634, 2010 U.S. Dist. LEXIS 125745 (N.D. Cal. Nov. 17, 2010): Class defined as anyone who experienced a hard drive “failure.” The problem was determining what constituted a “failure” and limiting that phrase to failures caused by the alleged product defect.
Notes - The Maxtor case provides an example of a decision where the court preferred to characterize the issues in relation to the express Rule 23 requirements. The case also illustrates a common problem in cases where causation may be an issue. By trying to limit class membership to only those individuals who suffered harm, the plaintiffs created a vagueness problem.
Failsafe Class
Issue - Class definition includes only those individuals who will ultimately prove their claims on the merits, so that class membership is not determined until a decision on the merits occurs. The main problem with failsafe class is that it puts the defendant in a lose-lose situation. Either the class wins at trial, binding the defendant to a classwide judgment, or the defendant prevails but gets no preclusive effect against absent class members.
Example – Nudell v. Burlington N. & Santa Fe Ry. Co., 2002 WL 1543725 (D.N.D. 2002): The court denied certification after determining that class membership hinged on class members’ ability to prove all of the factual issues that would prove their claims on the merits, including that they owned land abutting a railroad easement, that they did not give consent to the placement of utility cables on the easement, and so on.
Notes - The problem in Nudell may have been due to a failure to develop the record sufficiently to convince the court that class membership could be determined based on objective criteria. This is an example of a case where problems with the class definition could be remedied. The case ultimately settled on a classwide basis after the class was re-defined.
Overbreadth
Problem – Class includes members who did not suffer injury or who have no legal right to recover.
Examples – Sanders v. Apple Inc., 672 F. Supp. 2d 978 (N.D. Cal. 2009): In action for deceptive advertising, class definition included all persons who ”own” a 20-inch iMac. The court found this definition overly broad because it included individuals who didn’t purchase the product and those who weren’t deceived by the advertising. Anderson v. United Fin. Sys. Corp., 281 F.R.D. 292 (N.D. Ohio 2012): Class was found to be overly broad because it included class members whose claims were time-barred and who had no private right of action.
Notes - In some cases, overbreadth can be cured simply by narrowing the class definition. On others, however, overbreadth is a symptom of predominance issues that may be difficult to remedy.
Class Definitions in Class Action Settlements
The panel also discussed issues in class definition within the settlement context. As is true with other threshold requirements, the courts are generally more lenient about class definitions in the settlement context than they are in the litigation context, in large part because manageability concerns are lessened when otherwise contested issues do not have to be resolved. An example is the DeBeers diamond settlement, Sullivan v. D.B. Invs., Inc., 667 F.3d 273 (3d Cir. 2011), where the Third Circuit affirmed certification of a settlement class over objections claiming that some of the class members would not have had a private right of action due to variations in state law. Whether the inclusion of class members whose claims are barred or significantly weaker than other class members should be a bar to certification of a settlement class probably depends on whether other class members will suffer as a result. If it’s simply a matter of the defendant agreeing to waive defenses as to a portion of the class, then courts are more likely to overlook variations in the strengths and weaknesses of individual class members’ claims.
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