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Posts Tagged ‘class action appeal’

Phoenix Attorney Shawn Aiken sent me an advance copy of a draft class action bill set to be introduced in the Arizona legislature this week.  The bill sets forth some specific requirements for class certification that are much more exacting than those required under federal Rule 23 and most state class action rules.  Some of the highlights are summarized below.  Click this link for a complete copy of the bill.

  • clear and convincing evidence would be required to justify a grant of class certification
  • orders granting class certification would have to be supported by a detailed written statement of the reasons and evidence justifying the decision
  • in assessing superiority, the court would be required to consider, among other things, “whether it is probable that the amount which may be recovered by individual class members will be large enough in relation to the expense and effort of administering the action to justify maintaining the case as a class action”
  • there would be a rebuttable presumption against class certification in cases involving claims where individual knowledge, causation, and  reliance are required elements
  • certification of a case as a class action would not relieve any class member of the requirement of proving individual injury or damages
  • class notice must include a statement of “the possible financial consequences for the class”
  • the law would expressly provide that the plaintiff would bear the initial cost of distributing notice to the class
  • appeals from orders granting or denying class certification could be taken as a matter of right the same as a final judgment, and trial court proceedings would be automatically stayed pending the appeal

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As reported by Yuma, AZ CBS affiliate KSWT TV, the Arizona Supreme Court issued an opinion today holding that denials of class certification are not subject to interlocutory appeal under the state’s regular appeals procedure.   A slip copy of the decision is available at the court’s website: Garza v. Swift Transportation Co., No. CV-08-0382-PR (Ariz., August 24, 2009).  It is important to note that the court recognized that interlocutory appeals of class certification decisions may still be allowed in “extraordinary” cases under the state’s “special action jurisdiction” rules.

In reaching the decision, the court overruled its own prior decision and instead relied on federal jurisprudence prior to the addition of FRCP 23(f) in 1998, which now expressly permits discretionary interlocutory appeals in the federal courts.  In addition to illustrating how state court rules on interlocutory appeal of class certification decisions may differ from the federal courts, the case reflects how state court rules may lag behind the Federal Rules of Civil Procedure and how the state courts may apply outdated federal precedent in interpreting their own rules.

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According to the Daily Pilot and the California Chronicle, a California lawmaker has introduced a bill, AB 298, to allow defendants to file interlocutory appeals of class certification decisions.  The bill’s sponsor, Assemblyman Van Tran, has authored a guest blog post on The California Civil Justice Blog explaining the objectives behind the bill, which include helping the state’s economic recovery by promoting a better climate for business. 

It is unclear from the news articles or Tran’s blog post whether the bill would allow interlocutory appeal as of right or whether appeals would be discretionary, as they are under Rule 23(f), Federal Rules of Civil Procedure.  Either way, the goal of creating an economic impact of any significance by simply allowing class action defendants to appeal class certification decisions seems somewhat overly optimistic, even assuming that the bill has any chance of passage.  Previous class action reform bills introduced over the past few years have not fared well, according to the California Chronicle article.

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If you’re looking for a fun-filled way to spend a Tuesday lunch hour and need CLE credits, check out Strafford Publications’ upcoming CLE Teleconference Rule 23(f) Class Certification Appeals: Strategies for Pursuing or Opposing Appellate Review in the Absence of Clear Standards.  The fun will begin on January 20, 2009 at 1PM Eastern.  For more information and to register, follow this link.

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Does a United States Circuit Court of Appeals decision not to review an order granting or denying class certification mean that the appellate court agreed with the class certification order?  Not necessarily.

Since 1998, Rule 23(f) of the Federal Rules of Civil Procedure has provided a way to seek appellate review of a federal district court’s grant or denial of class certification.  However, appellate review is completely discretionary.  The rule states that a “court of appeals may permit an appeal” of a class certification order if filed within 10 days.  FRCP 23(f) (emphasis added).  This means that before considering any of the issues raised on appeal, the court of appeals first considers whether to allow the appeal to go forward at all.  The court of appeals has “unfettered discretion whether to permit the appeal” and “[p]ermission to appeal may be granted or denied on the basis of any consideration that the court of appeals finds persuasive.”  Rule 23, comment to 1998 amendments. 

Thus, when a U.S. Circuit Court of Appeals denies permission to appeal a class certification order, the denial has no obvious meaning in terms of the ultimate resolution of the issues sought to be raised by the appeal.  Denial could mean that the court agrees with the underlying decision regarding class certification, but more likely it means that the court simply did not believe that it was necessary to resolve the issues on interlocutory (before trial and/or final judgment) review.   Normally, interlocutory issues may not be appealed at all, the exception to this rule being where interlocutory appeal is allowed by a specific statute or rule.  See 28 U.S.C. 1292.  As the 1998 comments to Rule 23 note, a Federal Judicial Center study “supports the view that many suits with class-action allegations present familiar and almost routine issues that are no more worthy of appellate review than many other interlocutory rulings.”  So, the fact of denial of a request under Rule 23 for review of a class certification order doesn’t mean that the court of appeals agrees with the substance of the order.

Any number of things can happen to a class certification order even if interlocutory review is denied.  The trial court can exercise its discretion under Rule 23(c)(1)(C) to alter or amend the order at any time.  Later proceedings at the trial court level, especially the development of key facts, can change the court’s decision on certification.  Alternatively, the parties may reach a settlement in which they agree to alter the class definition for settlement purposes, subject to the trial court’s approval.  Still another possibility is that the court of appeals may review a court’s pretrial class certification decision as part of an appeal after a final judgment is entered by the trial court, either as a result of a trial or as a result of other rulings on the merits of the claims.  The fact that a court of appeals denied permission to appeal a class certification decision before a final judgment does not bar it from considering those issues in an appeal taken as of right after the final judgment.  As a result, it is possible–although rarely do proceedings ever get this far in practice–for a trial court to grant certification, have a trial on the claims for which the class was certified, and enter judgment for or against the class, only to have the court of appeals later reverse the initial order granting class certification.

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