Proposed Amendments to Class Action Rules

Robert L. Byer and Karin J. Kysilka*

On August 15, 1996, the Advisory Committee on Civil Rules published proposed amendments to Fed. R. Civ. P. 23, class actions. After years of discussion and seminars, the Committee has created a proposal far less dramatic than the initial project, but one which will still noticeably affect the adjudication and settlement of class action lawsuits.

The process began in 1986 with a proposal for broad changes from the American Bar Association, which the Rules Committee had originally planned to publish in 1993. Sweeping changes in Rules 4,11, and 26 that year postponed the release. Now, after further study and discussion with class action lawyers, the proposals have entered the comment period, which will last until February 15, 1997. During this time, the Committee will hold three hearings, with at least one in the eastern United States and one in the western United States.

The proposed amendments focus on three key areas: promoting judicial efficiency; preventing abuse and providing fairness to members of the class; and making it easier to certify classes in appropriate mass tort cases.

Promoting Efficiency

The majority of changes to Rule 23 will promote judicial efficiency. They will do so by reducing judicial error and increasing consistency within the court system. The amended criteria for finding common questions of law or fact, for example, include considering the practical ability of class members to proceed without certification, 23(b)(3)(A), and the maturity of related litigation involving class members, 23(b)(3)(C).

One of the key ways in which the new rule will promote judicial efficiency is by explicitly allowing for a settlement class, (b)(4). The Circuits are now divided on whether it is proper to certify a class for settlement purposes if it does not meet the (b)(3) requirements. The proposal would allow such settlement classes. The courts may certify such a class if parties who have already reached a settlement request one. Certification under proposed new rule 23(b)(4) still requires predominance and superiority and notice as well as the prerequisites of 23(a), but it does not mandate evaluating concerns such as choice-of-law which would be necessary at trial. Not only will eliminating inconsistencies among the Circuits promote efficiency, but allowing settlement classes with reduced requirements will also have the potential to resolve claims which would have otherwise been dismissed or litigated separately.

The proposed changes also promote efficiency by reducing the opportunity for judicial error. For example, proposed new rule 23(f) would provide for a discretionary appeal of an order granting or denying certification if the aggrieved party makes an application within ten days after the court enters the order. This appeal does not stay proceedings in the district court (unless the district judge or the appeals court so orders), but it does give the system an opportunity to correct a certification error before wasting resources on prolonged litigation or forcing parties into an unwarranted settlement posture.

Similarly, proposed new rule 23(c) would now direct a court to decide class certification "when practicable" after the litigation commences. Under the current rule, the courts are to make such a determination "as soon as practicable." The difference has grown out of the de facto practices in many jurisdictions. An early certification requirement, the Advisory Committee notes, might unwisely shortchange inquiries into the desirability of class litigation. This change also allows for the practice of ruling on certain motions prior to certification. If the case will be dismissed on summary judgment, for example, regardless of certification as a class action, then the inquiry under 23(b) is an inefficient exercise.

Preventing Abuse and Providing Fairness to Class Members

Aside from efficiency concerns, one of the most frequent criticisms of class action litigation is that the true winners are lawyers, not the members of the class. Consequently, the amended rule would have courts consider both the practical ability of class members to pursue individual litigation as well as their interest in doing so, proposed new rule 23(b)(3)(B), and it would have the courts weigh the burdens of litigation against the realistic hope of recovery, proposed new rule 23(b)(3)(F). Ideally, this new focus will stop the pursuit of litigation that takes more out of the parties, plaintiffs and defendants alike, then plaintiffs can recover. By mandating a cost/benefit analysis, proposed rule 23(b)(3)(F) will prevent the certification of classes which provide greater benefit to plaintiffs' counsel than to class members. New rule 23(b)(3)(F) specifically requires courts to consider, "whether the probable relief to individual class members justifies the costs and burdens of class litigation."

Similarly, the Advisory Committee encourages defining classes narrowly so as to avoid dragging in members whose claims could support individual litigation. By definition, individual concerns are lost in the crowd of class actions. Sharing a mass settlement or mass award with other members whose claims cannot support individual litigation may not do justice to these individual complaints.

Additionally, the maturity of related litigation is crucial. Practitioners have advised allowing some individual cases to go to trial in mass tort litigation before seeking certification because premature certification is subject to incomplete information on the scope of damages. The new rule would allow for such considerations.

Under proposed new rule 23(b)(4), the Committee offers additional protection for class members. As in (b)(3) actions, members must receive notice and have the right to opt out of the settlement. The courts would also not be able to approve a dismissal or compromise without a hearing, proposed rule 23(e). Such a hearing may not occur until the class members have received notice, and the Committee encourages judicial attention to ensure such notices are clear. Again, the rule attempts to guarantee that litigants, either as individuals or class members, do not suffer because of the existence of a class action suit.

Class Actions and Mass Torts

In addition to promoting equity and efficiency concerns, the proposed amendments to Rule 23(b)(3) legitimize for the first time a role for class actions in mass torts. In the original Advisory Committee comments to Rule 23(b)(3) in 1966, the Committee specifically warned against using class actions for "mass accident" litigation because of the likelihood of individualized questions as to damages, liability, and defenses of liability. In the current proposals, the Committee notes that it made changes with an eye towards the potential impact on the aggregation of tort claims. The Committee debated, then declined, to suggest broader changes to specifically address problems of mass tort litigation. As the legal profession further develops the practice of class action torts, such changes will not be far behind.

On the whole, the proposed changes to Rule 23 reflect the reality of class action litigation. The legal profession has put the Rule to uses the original drafters did not envision and did not intend. As a practical matter, judges have had to adapt portions of the Rule to make it workable. The proposed changes reflect these adaptations. As an equitable matter, high publicity class action suits sometimes degenerate into ends in and of themselves instead of means to a superior resolution for individual class members. The proposed changes attempt to address those concerns as well.

The proposed amendments to Rule 23 are available from the Rules Committee Support Office in Washington D.C. at (202) 273-1824 or from the internet at They also will be published in the West advance sheets.

*Robert L. Byer is a partner at Kirkpatrick and Lockhart, LLP, a former Judge of the Commonwealth Court of Pennsylvania, and a member of the National Practitioners Advisory Council of the Federalist Society.

Karin J. Kysilka is a second-year student at Harvard Law School, a member of the student chapter of the Federalist Society at Harvard, and a member of the Journal of Law and Public Policy.


2001 The Federalist Society