Class action is a term used to describe a group of individuals designated as a class, having a common interest in the outcome of litigation. The Class Action is a procedural device created under Federal Rule of Civil Procedure 23 (or under its state court analogues), which allows for global resolution of common claims. Thus, through the prosecution of claims on behalf of an entire certified class, the Class Action mechanism provides a representative model of resolution.
In 1938, Congress approved the first Federal Rules of Civil Procedure, including Rule 23, which provided for Class Actions. In 1966, Congress approved changes to Rule 23 that created a three-part classification system with requirements specific to each of the three types of traditional Class Action classifications. These three types are defined in Federal Rule of Civil Procedure 23(b) and consist of: 1) actions where prosecuting separate actions by or against individual class members would create a risk of inconsistent or varied adjudications with respect to individual class members that would establish incompatible standards for the party opposing the class or adjudications that, as a practical matter, would substantially impair non-class members’ ability to protect their interests; 2) actions where the party seeks final injunctive or declaratory relief with respect to the class as a whole; and 3) actions where the party seeks monetary damages involving questions of law or fact that predominate over any questions affecting only individual members, in which a Class Action is superior to other available methods for fairly and efficiently adjudicating the controversy.
The current Federal Rule of Civil Procedure 23 prescribes a number of conditions and prerequisites for class certification. At the outset, an individual or group of individuals can seek class status only if: 1) the class is so numerous that joinder of all members is impracticable – numerosity; 2) there are questions of law or fact common to the class – commonality; 3) the claims or defenses of the representative parties are typical of the claims or defenses of the class – typicality; and 4) the representative parties will fairly and adequately protect the interests of the class – adequacy of representation. The different forms of Class Actions are set forth in detail in the Federal Rules of Civil Procedure: Fed.R.Civ.P. 23(b)(1) – Risk of Inconsistent or Dispositive Adjudications; Fed.R.Civ.P. 23(b)(2) – Declaratory or Injunctive Relief; and Fed.R.Civ.P. 23(b)(3) – Damages.Once these prerequisites have been established, a party seeking damages through class certification under Federal Rule of Civil Procedure23(b)(3) must then also show that: 1) common questions of law or fact predominate; and 2) a Class Action is the superior way to adjudicate the controversy.
After the lead plaintiff (also known as a “class representative”) files a Class Action lawsuit, the parties conduct discovery and then present the claims to the court to determine if the claims meet the requirements of a Class Action. If so, the court will “certify” the lawsuit to proceed as a Class Action. If the Class Action is certified, notice will be provided to the other class members and the Class Action claims will proceed to trial or settlement. In the typical Class Action, potential members of the class will have the right to make an election to either receive the benefits of any recovery in the lawsuit, or instead to opt out of the class action and pursue a recovery on their own.
The benefits of a Class Action arise from the consolidation of similar legal claims brought by a small number of class representatives in order to represent the interests of a large class of claimants. This fosters efficient judicial administration by saving time and money for the parties and the public and promotes consistent decisions regarding similar claims. Class Actions also allow multiple claims from several persons in various jurisdictions and can bring together smaller claims, which would not have been economically feasible to maintain as individual claims.