Collective Redress & Class Actions 2023 Comparisons

Class actions in the United States can trace their origins from the Viking/Norse and Anglo-Saxon “group litigation”, which was a common method at the time to bring grievances by a few on behalf of the many. In the United States, the first reported decision regarding “group” or “class litigation” stemmed from the Supreme Court opinion in West v Randall where Justice Joseph Story wrote: “It is a general rule in equity, that all persons materially interested, either as plaintiffs or defendants in the subject matter of the bill ought to be made parties to the suit, however numerous they may be”.

Thereafter, the “group” litigation device was codified in the law by the Federal Equity Rules, which governed civil actions from 1822 until 1938. Rule 48 was passed in 1842 where the Supreme Court specified:

“Where the parties on either side are very numerous, and cannot, without manifest inconvenience and oppressive delays in the suit, be all brought before it, the court in its discretion may dispense with making all of them parties, and may proceed in the suit, having sufficient parties before it to represent all the adverse interests of the plaintiffs and the defendants in the suit properly before it. But in such cases the decree shall be without prejudice to the rights and claims of all the absent parties”.

In 1822, the United States Supreme Court was authorised by the United States Congress to create the Federal Equity Rules which are the precursor to the current rules governing class actions.

This regime is not applicable in the United States, which is not a member of the EU.

In the United States, the court system is decentralised, with judicial authority shared between the federal courts and the state courts. Each individual state, or US territory, has its own rules of procedure and court hierarchy (ie, lower/trial courts, appellate courts, and state supreme court).

The federal courts have three levels. District courts are the trial courts where litigation is initially filed. There are 94 district courts. Rulings and jury verdicts of the district courts are appealed to the circuit courts of appeal (there are 12 circuit courts), and then to the United States Supreme Court. Federal courts are governed the Federal Rules of Civil Procedure.

In class actions, Rule 23 of the Federal Rules of Civil Procedure controls the prosecution and defence of class action litigation. In order to proceed as a class action, a plaintiff must meet the prerequisites of Rule 23(a) and (b). Rule 23(a) states that “[o]ne or more members of a class may sue or be sued as representative parties on behalf of all members only if:

(1) the class is so numerous that joinder of all members is impracticable;

(2) there are questions of law or fact common to the class;

(3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and

(4) the representative parties will fairly and adequately protect the interests of the class.

In addition to the prerequisites of Rule 23(a), a plaintiff must also meet at least one of the factors of Rule 23(b). They include that a class action may be maintained if:

(1) prosecuting separate actions by or against individual class members would create a risk of:

(A) inconsistent or varying adjudications with respect to individual class members that would establish incompatible standards of conduct for the party opposing the class; or

(B) adjudications with respect to individual class members that, as a practical matter, would be dispositive of the interests of the other members not parties to the individual adjudications or would substantially impair or impede their ability to protect their interests;

(2) the party opposing the class has acted or refused to act on grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole; or

(3) the court finds that the questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy. The matters pertinent to these findings include:

(A) the class members’ interests in individually controlling the prosecution or defense of separate actions;

(B) the extent and nature of any litigation concerning the controversy already begun by or against class members;

(C) the desirability or undesirability of concentrating the litigation of the claims in the particular forum; and

(D) the likely difficulties in managing a class action”.

The class action device is used for many types of litigation in the United States including consumer protection, product liability, employment, securities, civil rights, antitrust, data breach, and environmental protection to name just a few.

Federal Statute 28 U.S.C.A. § 1332(d)(1)(B) defines a class action as “any civil action filed under rule 23 of the Federal Rules of Civil Procedure or similar State statute or rule of judicial procedure authorizing an action to be brought by 1 or more representative persons as a class action”.  In passing this section, Congress emphasised that the term “class action” should be defined broadly to prevent “jurisdictional gamesmanship”:

“[T]he Committee further notes that the definition of “class action” is to be interpreted liberally. Its application should not be confined solely to lawsuits that are labeled “class actions” by the named plaintiff or the state rulemaking authority. Generally speaking, lawsuits that resemble a purported class action should be considered class action for the purpose of applying these provisions.” See S.Rep. No. 109–14, at 35 (2005).

Other federal statutes also define class actions. The Securities Litigation Uniform Standards Act (SLUSA), for example, defines a “covered class action” as “any single lawsuit in which ... one or more named parties seek to recover damages on a representative basis on behalf of themselves and other unnamed parties similarly situated, and questions of law or fact common to those persons or members of the prospective class predominate over any question affecting only individual persons or members....” See 15 U.S.C. § 77p(f)(2).

These definitions have been adopted by federal and state courts.

Rule 3 of the Federal Rules of Civil Procedure states that “a civil action is commenced by filing a complaint with the court.” This includes class actions.

In 2005, the United States Congress passed the Class Action Fairness Act (CAFA) which largely provided federal courts with jurisdiction for all class actions that sought more than an aggregate of USD5 million in damages. See 28 U.S.C. § 1332(d). Prior to the passing of CAFA, all plaintiffs had to be from a diverse jurisdiction from the defendants to have federal diversity jurisdiction; however, now, only one plaintiff need be diverse from one defendant.

Filing

Generally, the class action will begin with the filing of a complaint. The defendants will be served the complaint and given a chance to respond. Often, the defendants will file a motion to dismiss the complaint which seeks the court to dismiss or end all, or part, of the case in its early stages. The defendants may also choose to answer the complaint, which almost always includes a denial of liability on the merits of the action, and raise defences that will be brought.

If the court denies the motion to dismiss, the defendants will file an answer to the complaint. The exchange of information would then commence. This is called discovery. Parties may send requests for documents, written questions called interrogatories, and schedule depositions (questioning under oath) of witnesses.

Class Certification

Thereafter, the plaintiffs file a motion for class certification, which requests the court to certify the class as defined by the plaintiffs. If granted, this would have the effect of allowing all members of the class to have their damages aggregated together for one single judgement. It would also make the judgement of the court binding on all members of the class.

In most courts, parties have the ability to immediately appeal an order granting or denying class certification. In federal court, Rule 23(f) of Federal Rules of Civil Procedure governs appeals of class certification orders. These appeals are expedited.

Dispositive Motions

After the class certification stage, the parties engage in dispositive motion practice seeking to end all or part of the action. The most common motion at this stage is a motion for summary judgment. In federal court, this type of motion is governed by Rule 56 of the Federal Rules of Civil Procedure. This Rule states that “[a] party may move for summary judgment, identifying each claim or defense — or the part of each claim or defense — on which summary judgment is sought. The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law. The court should state on the record the reasons for granting or denying the motion”.

After dispositive motions are completed, the trial will occur on all issues remaining.

Settlement

If the action should settle, then there are two levels of approval. The first level is called preliminary approval. There, the court assesses whether the settlement is in the “range of reasonableness”. If the court grants preliminary approval, the class is provided notice of the settlement and an opportunity to object (comment against the settlement) or opt-out. If the class member opts out, they will not receive any benefits from the settlement, but will also not be bound by any judgment.

In addition to the class, the class action fairness act requires any regulating body of the defendant (ie, the state or US Attorneys General, Food and Drug Administration, Federal Trade Commission, etc) to receive notice of the settlement as well.

Once the notice period ends, the court will be requested to grant final approval and must find that the settlement is “fair, adequate, and reasonable” for the class. Once approved, the class may partake in the benefits of the settlement, and also releases the defendants for the conduct which was the gravamen of the Complaint.

Only members of the proposed class have standing to bring class actions on behalf of the class.

Rule 23 of the Federal Rules of Civil Procedure outline who may be in the class and the factors to be considered. In order to proceed as a class action, a plaintiff must meet the prerequisites of Rule 23(a) and (b). Rule 23(a) states that “[o]ne or more members of a class may sue or be sued as representative parties on behalf of all members only if:

(1) the class is so numerous that joinder of all members is impracticable;

(2) there are questions of law or fact common to the class;

(3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and

(4) the representative parties will fairly and adequately protect the interests of the class.

In addition to the prerequisites of Rule 23(a), a plaintiff must also meet at least one of the factors of Rule 23(b). They include that a class action may be maintained if:

(1) prosecuting separate actions by or against individual class members would create a risk of:

(A) inconsistent or varying adjudications with respect to individual class members that would establish incompatible standards of conduct for the party opposing the class; or

(B) adjudications with respect to individual class members that, as a practical matter, would be dispositive of the interests of the other members not parties to the individual adjudications or would substantially impair or impede their ability to protect their interests;

(2) the party opposing the class has acted or refused to act on grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole; or

(3) the court finds that the questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy. The matters pertinent to these findings include:

(A) the class members’ interests in individually controlling the prosecution or defense of separate actions;

(B) the extent and nature of any litigation concerning the controversy already begun by or against class members;

(C) the desirability or undesirability of concentrating the litigation of the claims in the particular forum; and

(D) the likely difficulties in managing a class action”.

There is no numerical limit to the number of class members that can be in a certified class, and they range from about 12 to in the millions.

In most class actions, all members of the defined class are “in the class” unless they opt-out of the class. There are limited types of litigation, such as certain employment cases, where class members are required to “opt in” to the class.

Once a class is certified, the court orders that notice be provided in accordance with Rule 23(c)(2) which requires that the “court must direct to class members the best notice that is practicable under the circumstances, including individual notice to all members who can be identified through reasonable effort. The notice may be by one or more of the following: United States mail, electronic means, or other appropriate means. The notice must clearly and concisely state in plain, easily understood language:

(i) the nature of the action;

(ii) the definition of the class certified;

(iii) the class claims, issues, or defenses;

(iv) that a class member may enter an appearance through an attorney if the member so desires;

(v) that the court will exclude from the class any member who requests exclusion;

(vi) the time and manner for requesting exclusion; and

(vii) the binding effect of a class judgment on members under Rule 23(c)(3)”.

Class members will be given the procedure for opting out of the class in the notice and must follow that procedure to properly exclude themselves from the class, otherwise the judgement of the court will bind them.

In each class action, the judge presiding over the class action will issue a scheduling order which will determine the time and process for adding additional parties. In a class action, this may also include substitution of the original class representative plaintiff which is allowed after the class action is filed, and even after the class is certified.

The presiding court has full power to manage the prosecution of the class action litigation from inception to conclusion. The court decides the schedule and speed of the litigation. It chooses which claims may go forward in the litigation and what type of class can be certified, along with the claims which the class may take to trial.

The Federal Rules of Procedure (and most state court analogues), require the parties to meet and confer on a schedule for the litigation which is then approved or modified by the court. Typically, class actions take two to three years from filing to disposition.

The court will create a scheduling order to determine the time to disposition of the litigation. The court can take into account the specifics of the class when considering expediting the proceedings – eg, age of the class members, exigency of a resolution (for example stopping the demolition of a building), and irreparable injury to the class. However, this is balanced with the due process rights of the defendants in a class action to allow them proper time to defend themselves.

Typically, the attorneys who represent the plaintiffs will fund the litigation and recoup these costs if the plaintiffs are successful through settlement or judgement.

However, over the last decade, third-party litigation funders have been increasingly allowed to provide funding for the litigation in exchange for a percentage of class counsel’s attorneys’ fees and costs obtained after successful completion of the litigation.

The Federal Rules of Civil Procedure, specifically Rule 26, govern the parameters of the exchange of information. This is called discovery. Each party is allowed to ask questions of the other parties and seek documents related to the class action. Questioning under oath, called depositions, may also occur.

The rules are strict in that only relevant information may be sought. Each local jurisdiction may have local rules which further govern the exchange of information pre-trial.

Although there are exceptions, multiple privileges apply to discovery:

• The attorney-client privilege protects confidential communications between an attorney and his or her client made for the purpose of furnishing or obtaining professional legal advice and assistance.
• The work product privilege protects from discovery by the opposing party documents and tangible things that are prepared in anticipation of litigation or for trial. This privilege is specifically mentioned in Rule 26(b)(3)(A) (“Ordinarily, a party may not discover documents and tangible things that are prepared in anticipation of litigation or for trial by or for another party or its representative”).
• The joint plaintiff or joint defence privilege, which provides that one group of clients and their counsel can communicate with another group of clients and their separate counsel – all without allowing their common adversary (the opposing party) to discover those communications.

Depending upon what statute or law the class action is brought pursuant to, class action remedies in the United States can include monetary awards such as compensatory and punitive damages.

Further, class actions can have a court declare certain conduct to be illegal. This is called a declaratory judgment.

Finally, class actions can obtain injunctive relief which can include business practices changes, corrective disclosures, or reversal of a government action (such as a policing practice).

Settlements in a class action can be obtained through private negotiations between the parties; however, most scheduling orders entered by state and federal courts require the parties to submit to a formal alternative dispute resolution (ADR) process with a certified mediator. The mediator is often certified by the state or jurisdiction to conduct the ADR process and typically is also an attorney or former judge who facilitates the settlement negotiations.

The parties jointly attempt to select the mediator; however, if they cannot agree, the court can appoint one.

A judgement in a certified class action is binding on the class and the defendants as they are defined by the judgment.  Enforcement of a class judgment is no different than enforcement of any other judgment.

Currently, there are no policy reforms to Rule 23 of the Federal Rules of Civil Procedure, which governs class actions, planned. However, courts continue to refine and alter the landscape of class actions on a yearly basis.

The Rules Enabling Act of 1934 (28 U.S.C. § 2071-2077) authorises the Supreme Court of the United States to promulgate rules of procedure, which have the force and effect of law.

The Supreme Court has delegated the rule-making process to the Judicial Conference of the United States. The Judicial Conference serves as the policy-making body for the federal courts. It convenes twice a year to consider administrative and policy issues affecting the federal court system, and to make recommendations to Congress concerning legislation involving the judicial branch. The Judicial Conference appoints advisory committees to oversee and administer suggested changes to the Federal Rules. When an advisory committee recommends an amendment to its rules or forms, it must obtain the approval of the Judicial Conference Committee on Rules of Practice and Procedure to publish the proposed amendment for public comment. During the comment period, the public is encouraged to submit written comments and may also request to testify at public hearings on the proposed amendment. Thereafter the Judicial Conference considers and approves, in whole or in part, the suggested rules changes.

The Class Action Rule in the Federal Rules of Civil Procedure is Rule 23 and has been amended multiple times since its inception and further may be suggested to the Judicial Conference who considers the changes. As of the last Judicial Conference meeting in June 2023, there are no changes to Rule 23 being suggested.

Brexit has had no effect on these matters.

Class Counsel Leadership

In class actions in the United States, Rule 23(g) governs the appointment of leadership in class actions. Rule 23(g)(1) states that “[u]nless a statute provides otherwise, a court that certifies a class must appoint class counsel”.

Rule 23(g)(1)(a) states that in appointing class counsel, the court must consider:

• the work counsel has done in identifying or investigating potential claims in the action;
• counsel’s experience in handling class actions, other complex litigation, and the types of claims asserted in the action;
• counsel’s knowledge of the applicable law; and
• the resources that counsel will commit to representing the class.

Further, Rule 23(g)(1)(B) may consider any other matter pertinent to counsel’s ability to fairly and adequately represent the interests of the class. Courts have interpreted this section to encourage consideration of diversity in selecting class counsel leadership. Some cases illustrating these considerations are below:

• “Diversity is also a factor that I weigh carefully, as do my colleagues in this District and across the nation”. In re Meta Pixel Healthcare Litig., 22-CV-03580-WHO, 2022 WL 18399978, at *4 (N.D. Cal. Dec. 21, 2022) (“It matters to me that lawyers from groups that have been historically under-represented in the legal profession have meaningful opportunities to participate in this type of litigation”).
• In re JUUL Labs, Inc. Marketing, Sales Practices and Products Liability Litig., No. 19-md-02913 (N.D. Cal.), Dkt. 821 at 16:3-5 (“I’d like to see what your suggestions are as far as leadership, who are the people who are going to be responsible in a way that enhances the strengths you have in diversity”).
• In re Stubhub Refund Litig., 2020 WL 8669823, at *1 (N.D. Cal. 2020) (appointing as co-lead interim counsel applicants who “demonstrated careful attention to creating a diverse team”).
• In re Robinhood Outage Litig., 2020 WL 7330596, at *2 (N.D. Cal. 2020) (noting the need for diversity and how “the attorneys running this litigation should reflect the diversity of the proposed national class”).
• Sayce v Forescout Technologies, Inc., 2020 WL 6802469, at *9 (N.D. Cal. Nov. 19, 2020) (noting “the apparent lack of diversity, including by female lawyers” among co-lead counsel and “strongly urg[ing] all parties to this case to make meaningful litigation opportunities available to junior and under-represented lawyers throughout the pendency of this action”) (emphasis omitted).