The Federal Class Action Practice Manual

Chapter 6: Pleading, Certification, Notice and Tolling

[§32] Pleading Elements: Threshold Considerations

A class action is commenced by the filing of a complaint seeking class certification in the district court. The filing of the complaint must be followed with a timely filed motion seeking certification of the class sought in the complaint. See United Brotherhood of Carpenters and Joiners of America Local 899 v Phoenix Associates, Inc., 152 F.R.D. 518, 521 n.3 (SD W Va 1994). Local rules may have particular requirements for class action litigation and should be consulted before filing the complaint. See e.g., Rule 203, District of Columbia Local Rules of Practice; Rule 212, Middle District of North Carolina Local Rules of Practice.

Counsel in the class action complaint, must clearly articulate that the action satisfies all four of the criteria required by Rule 23(a):

  • Numerosity
  • Commonality
  • Typicality
  • Adequacy of Representation

Further, a well pleaded complaint must set forth the basis why the action fits within at least one of the categories identified in subsection (b) of the Rule as follows:

  • Individual adjudication would prejudice party opposing the class (b)(1)(A)
  • Individual adjudication would prejudice class members themselves (b)(1)(B)
  • Injunctive or declaratory relief is proper on a class-wide basis (b)(2)
  • Common questions of fact or law predominate, and class action is superior device for adjudication (b)(3)
See In re A.H. Robbins Co., Inc., 880 F.2d 709, 727-28 (4th Cir.), cert denied, 493 U.S. 959, 110 S.Ct 377, 107 L.Ed 2d 362 (1989).

Finally, the following may be required in some jurisdictions: That the complaint reference to the portion or portions of Rule 23, Federal Rules of Civil Procedure, under which the suit is claimed properly to be maintained as a class action; that the complaint contains appropriate allegations justifying such claim, including but not necessarily limited to: the size (or approximate size) and definition of the alleged class; the basis upon which the plaintiff claims to be an adequate representative of the class, or if the class is comprised of defendants, that those names as parties are adequate representatives of the class; the alleged questions of law and fact claimed to be common to the class; and, in actions claimed to be maintainable as class actions under Rule 23(b)(3) of the Federal Rules of Civil Procedure, allegations supporting the findings required by that subdivision. See Rule 203, Local Rules for the District of Columbia.

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[§33] Class Certification

In any case filed as a class action, certification is the one critical event which determines the ultimate manner in which the case shall proceed. Federal Rule of Civil Procedure 23(c)(1) requires the court to determine whether a class action is to be maintained as soon as practical after the commencement of an action. Price v Cannon Mills, 113 F.R.D. 66, 72 (MDNC 1986). In considering a motion for class certification, the court must determine only whether the requirements of Rule 23 have been satisfied and may not consider the merits of plaintiffs’ claim. Eisen v Carlisle & Jacquelin, 417 U.S. 156, 178, 94 S.Ct 2140, 40 L.Ed 2d 732 (1974); Riordan v. Smith, 113 F.R.D. 60, 62 (ND Ill. 1986). The trend is to give Rule 23 a liberal construction. Kidwell v Transp. Communications Int’l Union, 946 F.2d 283, 305 (4th Cir. 1991). Allegations made in the complaint must be taken as true when the court considers the merits of the motion for class certification. In re Southeast Hotel Properties Limited Partnership Investor Litig, 151 F.R.D. 597, 601 (WDNC 1993).

Rule 23(c)(1) provides that as soon as practicable after commencement of an action brought as a class action, the court shall determine by order whether it is to be so maintained. Counsel must consult the local rules of court for the district where the suit is to be filed before filing the complaint. District courts may require a class action to state on the face of the complaint the special nature of the case. See e.g., Rule 203, District of Columbia Local Rules of Practice; Rule 212, Middle District of North Carolina Local Rules of Practice. Failure to timely move for certification may be grounds upon which certification is denied. Price v Cannon Mills, 113 F.R.D. 66, 72 (MDNC 1986); see also East Texas Motor Freight System, Inc. v Rodriguez 431 U.S. 395, 405, 97 S.Ct 1891, 52 L.Ed 2d 453 (1977).

The appropriate procedure for seeking class action certification is to file a motion with supporting memorandum requesting that the case be certified and specifying the grounds therefore. The plaintiff bears the burden of proving that certification is appropriate. Windham v American Brands, Inc., 565 F.2d 59, 64 fn. 6 (4th Cir. 1977) (collecting cases); see also, Butt v Allegheny Pepsi-Cola Bottling Co., 116 F.R.D. 486, 489 (ED Va 1977); Doctor v Seaboard Coast Line Rwy Co., 540 F.2d 699, 706 (4th Cir. 1976); Carracter v Morgan, 491 F.2d 458, 459 (4th Cir. 1973); Poindexter v Teubert, 462 F.2d 1096, 1097 (4th Cir. 1972).

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[§33.1] The Tolling Effect of a Class Action as to Absent Class Members

A statute of limitation is tolled when it is interrupted by operation of law or policy to preclude its expiration against an absent class member during a relevant time period. In the context of a class action, courts have stated that the filing of a class action initiates a tolling period for those people defined as class members, as against the named defendants, and is limited to those claims asserted in the complaint. The term tolling effect refers to the manner in which the relevant statute of limitation period is extended for absent class members. See Chardon v Fumero Soto, 462 U.S. 650, 652 (1983).

Although there can never be absolute certainty that an absent class member's statute of limitations will be extended by a case filed as a class action, federal courts have recognized a general policy of honoring such tolling to preclude the statute running against absent class members during the pendency of a class action. Over a period of time, there has become a fairly well established body of law on the subject of class action litigation, and the policy reasons for not forcing absent class members to file a suit during the pendency of such cases. If absent class members are forced to file suits during the pendency of a class action, much of the economies of judicial management, and public benefit from representative litigation would become awash in a multitude of individual litigation.

American Pipe & Construction Co v Utah, 414 U.S. 538 (1974), is a leading case on the subject. The case was originally filed in federal court as a class action. Subsequently, class certification was denied. Individuals who were ostensible class members in the original complaint's class definition sought to intervene after certification was denied. The district court denied the absent class members' motion to intervene and held their claims had become barred by the statute of limitations while the class action was pending.

The Supreme Court in reversing the district court ruling held that the initiation of a class action suspends the applicable statute of limitations for all ostensible class members who would have been parties to the action had the suit been permitted to continue as a class action. Id at 554.

The American Pipe decision involved a situation where a federal statute of limitations was being interpreted. The case stands for the principle that statutes of limitations cease to run upon the filing of a class action and continues during the time a lawsuit maintains its character as a class action. Id at 551. If certification is denied or the case dismissed, the remaining time in the limitations period begins to run for that time which remained the tolling began.

Crown Cork & Seal Co v Parker, 462 U.S. 345 (1983) is another decision construing the tolling effect. After American Pipe was decided, three separate courts of appeals limited its tolling effect application to situations only where ostensible class members sought to intervene after denial of class certification.

As a result of that interpretation, absent class members who elected to proceed after certification was denied by filing their own lawsuits were having their cases dismissed as prescribed. The Supreme Court reversed this narrow application of the tolling effect stating:

Limitations periods are intended to put defendants on notice of adverse claims and to prevent plaintiffs from sleeping on their rights, but these ends are met when a class action is commenced. Class members who do not file suit while the class action is pending cannot be accused of sleeping on their rights; Rule 23 both permits and encourages class members to rely on the named plaintiffs to press their claims. And a class complaint notifies the defendants not only of the substantive claims being brought against them, but also of the number and generic identities of the potential plaintiffs who may participate in the judgment. The defendant will be aware of the need to preserve evidence and witnesses respecting the claims of all members of the class. Tolling the statute of limitations thus creates no potential for unfair surprises, regardless of the method class members choose to enforce their rights upon denial of class certification.

Id 352-53. Numerous states have adopted the Federal Rules of Civil Procedure. The policy reasons for granting a tolling effect in state court cases is the same for state as for federal court.

As a general rule, the filing of a class action toll the statute of limitations for absent class members as to the claims against the defendants served with the suit. During the time period the case maintains its character as a class action, an ostensible class member may rely on the named plaintiffs to prosecute his case, or may file his own action for damages. When a class member elects to opt out of a class action, if the class is denied certification, or if the complaint is dismissed without prejudice as to absent class members, the tolling period ends. See In re Rhone-Poulenc Rorer Inc, 51 F3d 1293, 1298 (7th Cir. 1995). A suit filed after the dismissal or denial of class certification by an absent class member is not required to be identical to the earlier class action for the tolling effect to apply Tosti v. City of Los Angeles, 754 F.2d 1485, 1489 (9th Cir. 1985); however, the class action must put the defendant on notice of plaintiff’s individual claim. Notice is adequate if the individual claim involves the same allegations that were made in the class suit.

Some recent decisions, however, have circumscribed the policy of tolling. For instance, in Wade v. Danek, 1999 LEXIS 14887 (July 2, 1999), the Fourth Circuit refused to invoke the tolling doctrine to toll the limitations period in a personal injury case. Plaintiff alleged injuries arising from a pedicle screw spinal fixation device. Between the time of her operation and her filing suit, two federal court class actions had been filed for similar type claims. After the two cases were denied certification, plaintiff filed suit. However, the court held her claim barred by the statute of limitations. See Wade v. Danek, http://www.law.emory.edu/4circuit/july99/982036.p.html.

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[§34] Standard of Review for Class Action Rulings

District Courts generally have a great deal of latitude in deciding various aspects of class action litigation. For the most part, rulings are subject to the abuse of discretion standard. Certain issues, however, that may arise in class action litigation will be subject to de novo review on appeal. Since Rule 23(f) was enacted, further case law regarding interlocutory review will undoubtedly develop in the future. Those topics of issues subject to review in class action litigation which commonly arise, and the standards applicable thereto, follow:

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[§35] Standard or Review for Class Certification Rulings

The trend is to give Rule 23 a liberal construction. Kidwell v Transportation Com Intern Union, 946 F.2d 283, 305 (4th Cir. 1991). The district court has wide discretion in deciding whether to certify a proposed class. Sterling v. Velsicol Chemical Corp., 855 F.2d 1188, 1197 (6th Cir. 1988); In re American Medical Systems, Inc., 75 F.3d 1069 (6th Cir. 1996).

Assuming the court considers the criteria set forth in Rule 23 of the Federal Rules of Civil Procedure, and an adequate record exists to support the final determination, an appellate court will reverse only for an abuse of discretion. Linney v. Cellular Alaska Partnership, 151 F.3d 1234 (9th Cir. 1998); Hanlon v. Chrysler Corp., 150 F.3d 1011 (9th Cir. 1998); Boley v Brown, 10 F3d 218, 223 (4th Cir. 1993); Stott v Haworth, 916 F.2d 134, 139 (4th Cir. 1990). See also, Kendrick v. Jefferson County Bd. of Educ., 932 F.2d 910, 914 (11th Cir. 1991)(citing Walker v. Jim Dandy Co., 747 F.2d 1360, 1363 (11th Cir.1984)) The decision whether to certify a class pursuant to Rule 23, Fed.R.Civ.P., is clearly committed to the "broad discretion" of the district court. In re Catawba Indian Tribe of South Carolina, 973 F.2d 1133, 1136 (4th Cir. 1992). Review of certification is subject to an abuse of discretion standard. See e.g., Kidwell v Transportation Com. Int’l. Union, 946 F.2d 283, 305 (4th Cir. 1991). In Keel v. Wexler, 149 F.3d 589 (1998), the Seventh Circuit described the wide latitude given to district court judges as follows:

The Federal Rules of Civil Procedure provide the federal district courts with "broad discretion" to determine whether certification of a class-action lawsuit is appropriate. See Mira v. Nuclear Measurements Corp., 107 F.3d 584, 596 (7th Cir. 1997)(citing Chicago Police Ass'n v. Chicago, 7 F.3d 584, 596 (7th Cir. 1993)). 'Our review is "circumscribed" and we will reverse the grant . . . of class certification only for an abuse of discretion.' Id. We have likened appellants attempting to hurdle this high standard of review to 'rich men who wish to enter the Kingdom; their prospects compare with those of camels who wish to pass through the eye of a needle.' United States v. Glecier, 923 F.2d 496, 503 (7th Cir.), cert. denied, 502 U.S. 810, 112 S.Ct. 54, 116 L.Ed. 2d 31 (1991)(citing Matthew 19:24).

On the other hand, "courts may be noticeably less deferential to the district court when that court has denied class status than when it has certified a class." Baffa v. Donaldson, Lufkin & Jenrette Securities Corp., 2000 U.S. App. LEXIS 22162 at *13-14(2d Cir. 2000) quoting Caridad v. Metro-North Commuter R.R., 191 F.3d 283, 291 (2d Cir. 1999) (citations and quotations omitted), cert. denied, 146 L. Ed. 2d 791, 120 S. Ct. 1959 (2000).

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[§36] Standard of Review for Certification of Class for Settlement

An appellate court will reverse the district court's decision certifying a class for purposes of settlement "only upon a strong showing that the district court's decision was a clear abuse of discretion." See Class Plaintiffs v. Seattle, 955 F.2d 1268, 1276 (9th Cir. 1992)( citing Officers for Justice v. Civil Serv. Comm'n, 688 F.2d 615, 626 (9th Cir. 1982)). "This is especially true in light of he strong judicial policy that favors settlements, particularly where complex class action litigation is concerned." Id.

[§37] Certification Orders are Provisional and Subject to Revocation

The Federal Rules of Civil Procedure provide the federal district courts with "broad discretion" to determine whether certification of a class action lawsuit is appropriate. See Mira v. Nuclear Measurements Corp., 107 F.3d 466, 474 (7th Cir. 1997). Until final certification of a class is granted, and the order granting final certification becomes nonappealable, all prior orders granting certification must be viewed as provisional and subject to revocation. Stastny v Southern Bell Tel. & Tel., 628 F.2d 267, 273-76 (4th Cir. 1980); see Central Wesleyan College v W.R. Grace & Co., F3d 177 (4th Cir. 1993). An order certifying a class must be reversed if it becomes apparent, at any time during the pendency of the proceeding, that class treatment of the action is inappropriate. Stott v Haworth, 916 F.2d 134, 139 (4th Cir. 1990); Stastny v Southern Bell Tel. & Tel., 628 F.2d 267, 273-76 (4th Cir. 1980). Further, an order granting certification may be altered, expanded, subdivided or abandoned as the case develops. Vaszlavik v. Storage Technology Corp., 183 F.R.D. 264 (D. Colo 1998); Daigle v. Shell Oil Co., 133 F.R.D. 600 (D. Colo 1990).

A class action may be decertified at any time if it becomes apparent the criteria of Rule 23 will not be met if the action proceeds as a class. Thus, if during discovery it becomes apparent that the claims of class representatives are not typical of the class, that the class representative or chosen counsel are inadequate representatives, or that the action will be administratively unmanageable, the district court may decertify the class and require it proceed only an individual action. Further, under Rule 23(f), appellate review may be available on class action rulings.

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[§37.1] Certification Orders are Subject to Interlocutory Review

Federal Rule of Civil Procedure 23(f), allows federal courts of appeals to hear an interlocutory appeal of a district court'sorder granting or denying class certification. The Rule became effective on December 1, 1998 and reads as follows:

A court of appeals may in its discretion permit an appeal from an order of a district court granting or denying class action certification under this rule if application is made to it within ten days after entry of the order. An appeal does not stay proceedings in the district court unless the district judge or the court of appeals so orders.
Few cases have addressed the standards to be used when evaluating a Rule 23(f) petition. See Wolf Prado-Steiman v. Jeb Bush, 2000 U. S. LEXIS 19181 (11th Cir. August 11, 2000). Prior to Wolf, only the First and Seventh Circuits had explored this question in detail. See Waste Management Holdings, Inc. v. Mowbray, 208 F.3d 288 (1st Cir. 2000); Blair v. Equifax Check Services, Inc., 181 F.3d 832 (7th Cir. 1999).

Wolf discusses the background of Rule 23(f), and sets forth some guideposts for evaluating when an appellate court, and specifically the Eleventh Circuit, should permit a Rule 23(f) appeal:

A good starting point is the Committee Note accompanying Rule 23(f), which articulates the drafters' view of how courts should resolve petitions for appeal under this new rule. The Note emphasizes that "the court of appeals is given unfettered discretion whether to permit the appeal, akin to the discretion exercised by the Supreme Court in acting on a petition for certiorari. . . . Permission to appeal may be granted or denied on the basis of any consideration that the court of appeals finds persuasive." Id. The Note then observes that " permission [to appeal] is most likely to be granted when the certification decision turns on a novel or unsettled question of law, or when, as a practical matter, the decision on certification is likely dispositive of the litigation." Id. According to the Note:

Many suits with class-action allegations present familiar and almost routine issues that are no more worthy of immediate appeal than many other interlocutory rulings. Yet several concerns justify expansion of present opportunities to appeal. An order denying certification may confront the plaintiff with a situation in which the only sure path to appellate review is by proceeding to final judgment on the merits of an individual claim that, standing alone, is far smaller than the costs of litigation. An order granting certification, on the other hand, may force a defendant to settle rather than incur the costs of defending a class action and run the risk of potentially ruinous liability.

Id.

As summarized by the First Circuit, Rule 23(f) serves two key purposes: first, to provide a "mechanism through which appellate courts, in the interests of fairness, can restore equilibrium when a doubtful class certification ruling would virtually compel a party to abandon a potentially meritorious claim or defense before trial"; and second, to "furnish an avenue, if the need is sufficiently acute, whereby the court of appeals can take earlier-than-usual cognizance of important, unsettled legal questions, thus contributing to both the orderly progress of complex litigation and the orderly development of the law." Mowbray, 208 F.3d at 293.

Based on these purposes, the Seventh Circuit in Blair outlined three categories of cases for which Rule 23(f) review may be appropriate. As summarized in Mowbray: First, an appeal ordinarily should be permitted when a denial of class status effectively ends the case (because, say, the named plaintiff's claim is not of a sufficient magnitude to warrant the costs of stand-alone litigation). Second, an appeal ordinarily should be permitted when the grant of class status raises the stakes of the litigation so substantially that the defendant likely will feel irresistible pressure to settle. Third, an appeal ordinarily should be permitted when it will lead to clarification of a fundamental issue of law.

Id.

The Seventh Circuit put additional gloss on these three broad categories. It explained that a petitioner who sought to invoke either of the first two categories also would have to "demonstrate that the district court's ruling on class certification is questionable -- and must do this taking into account the discretion the district judge possesses in implementing Rule 23, and the correspondingly deferential standard of appellate review." Blair, 181 F.3d at 835. The court further observed that when reviewing petitions invoking the third and final category, it would focus on the importance of the issue to be resolved, more so than the likelihood of reversal. See id. Finally, it noted that even when an application touts a supposedly fundamental issue of law, a showing that an end-of-case appeal promises to be an adequate remedy will weigh heavily against granting a Rule 23(f) application. See id.

Recently, the First Circuit adopted Blair's Rule 23(f) taxonomy as "structurally sound" with one notable caveat. Mowbray, 208 F.3d at 294. The Mowbray court worried, we think rightly, that the third Blair category might "encourage too many disappointed litigants to file fruitless Rule 23(f) applications" since "a creative lawyer almost always will be able to argue that deciding her case would clarify some 'fundamental' issue." Id. The First Circuit then emphasized that "interlocutory appeals should be the exception, not the rule" because "many (if not most) class certification decisions turn on 'familiar and almost routine issues.'" Id. (citing Comm. Note, Fed. R. Civ. P. 23(f)). As a result, the Mowbray court concluded that "Blair's third category should be restricted to those instances in which an appeal will permit the resolution of an unsettled legal issue that is important to the particular litigation as well as important in itself and likely to escape effective review if left hanging until the end of the case." Id.

We find both the Blair and Mowbray opinions to be cogent explications of the Rule 23(f) inquiry. We think it important, however, to emphasize some additional considerations that may weigh against frequent interlocutory appellate review of class action certification decisions.

To begin with, there are too many class actions filed each year for federal appeals courts practicably to adjudicate class certification decisions on an interlocutory basis as a matter of course. As a statistical point of reference, we observe that according to the Federal Judicial Center, as of 1998 there were 1,742 active federal cases with class action activity. In 1994, there were only 816 such cases. A similar rise is reported for this Circuit; in 1998, according to the data, there were 221 active cases in this Circuit with class action activity, almost double the number of such cases, 114, during 1994.[7] Given these numbers, and the large volume of ordinary final judgments that by law must be considered by the courts of appeals, routinely granting interlocutory appellate review of class certification decisions is simply not practicable.

There are also powerful case management concerns that caution against routinely granting appellate review in these circumstances. Class certification orders also are not final judgments impervious to lower court review and revision. On the contrary, Rule 23(c)(1) specifically empowers district courts to alter or amend class certification orders at any time prior to a decision on the merits. That power is critical, because the scope and contour of a class may change radically as discovery progresses and more information is gathered about the nature of the putative class members' claims.[8] Indeed, Rule 23 contemplates that the class certification decision will be made prior to the close of discovery. Fed. R. Civ. P. 23(c)(1) (class status should be resolved "as soon as practicable after the commencement of" the action); see also Armstrong v. Martin Marietta Corp., 138 F.3d 1374, 1389 (11th Cir. 1998) (en banc) (citing data showing that most class certification decisions are made in the early stages of the litigation). Rule 23(f) should not be a vehicle for courts of appeals to micro-manage complex class action litigation as it unfolds in the district court.

Moreover, interlocutory appellate review of a class certification decision may short-circuit the district court's ability -- or at least willingness -- to exercise its power to reconsider its certification decision. If a decision on class certification has been fully reviewed and affirmed on an interlocutory basis, both the parties and the district judge may feel constrained from revisiting the issue and thereby potentially triggering a new round of appellate proceedings with the inevitable delay and effort of such proceedings. This possibility is troubling, because class certification determinations are so fluid and fact-sensitive that district courts should be encouraged rather than discouraged from reassessing whether the prerequisites of Rule 23 exist and whether a class action is the most efficacious way to resolve the dispute. Quite simply, "we should err, if at all, on the side of allowing the district court an opportunity to fine-tune its class certification order rather than opening the door too widely to interlocutory appellate review." Mowbray, 208 F.3d at 294 (citing Fed. R. Civ. P. 23(c)(1)) (internal citation omitted).

Finally, authorizing interlocutory review simply on the basis of a so-called "fundamental" or "unsettled" question of law sets a difficult precedent. We share the First Circuit's concern over encouraging a flood of Rule 23(f) petitions claiming that such a question is in dispute. Given the stakes of class action litigation, and the vast number of persons affected, many routine issues have the potential to take on substantial proportions and assume an importance they otherwise might not. Moreover, given the highly particularized nature of class action determinations, and the lack of case law applying Rule 23 in many contexts, we imagine it relatively easy for a litigant to identify some question of law implicated by the class certification decision and in good faith characterize that question as novel or unsettled. To justify immediate and interlocutory appellate review, something more is necessary -- something that creates a compelling need for resolution of the legal issue sooner rather than later.

Taking into account all of these considerations, the following guideposts may be utilized in determining whether to grant an interlocutory appeal under Rule 23(f).

First, and most important, the court should examine whether the district court's ruling is likely dispositive of the litigation by creating a "death knell" for either plaintiff or defendant. The prospect of irreparable harm from delaying appellate review of the class certification decision until after final judgment undoubtedly creates a compelling need for immediate review. Nevertheless, even ordinary class certification decisions by their very nature may radically reshape a lawsuit and significantly alter the risk-benefit calculation of the parties, leading to claims of irreparable harm. For that reason, the decision to grant interlocutory review based primarily on this factor generally should be limited to those cases where the district court's ruling, as a practical matter, effectively prevents the petitioner from pursuing the litigation. This might be the case where a denial of class status means that the stakes are too low for the named plaintiffs to continue the matter, or where the grant of class status raises the cost and stakes of the litigation so substantially that a rational defendant would feel irresistible pressure to settle. The size of the putative class and any record evidence regarding the financial resources of the parties are relevant to this inquiry. Also relevant, especially when a class has been certified in a mass tort case against a corporate defendant, is the existence and potential impact of related litigation against that defendant. The nature of the remedy sought in the case (and in damages cases, the amount of money potentially recoverable) is likewise relevant to this factor. For example, even a large class seeking declaratory or injunctive relief may create less pressure on a defendant than a class seeking compensatory and punitive damages so substantial that they threaten a defendant's solvency. We anticipate that the number of decisions truly warranting immediate review on this basis alone will be small.

Second, a court should consider whether the petitioner has shown a substantial weakness in the class certification decision, such that the decision likely constitutes an abuse of discretion. Ordinarily, the appropriateness of allowing a Rule 23(f) appeal should turn on more than the outcome of a preliminary debate about the merits of the district court's ruling. Interlocutory review may be appropriate when it promises to spare the parties and the district court the expense and burden of litigating the matter to final judgment only to have it inevitably reversed by this Court on an appeal after final judgment. Such a situation may exist, for example, when the district court expressly applies the incorrect Rule 23 standard or overlooks directly controlling precedent. Cf. Rutstein v. Avis Rent-A-Car Sys., Inc., 211 F.3d 1228, 1234-35 (11th Cir. 2000) (granting Rule 23(f) petition and reversing order granting class certification where in light of a prior Eleventh Circuit opinion "we do not see how plaintiffs can maintain a class action under Rule 23(b)(3) in the instant case"). In that situation, interlocutory review may be warranted even if none of the other factors supports granting the Rule 23(f) petition.[9] Typically, however, class certification decisions require the application of broad and flexible legal standards to unique and complex sets of facts that do not fit squarely within prior precedent. Due to the highly fact-sensitive nature of this inquiry, district courts are given wide latitude to decide whether and how to certify a class, and appellate scrutiny of such decisions is limited at any stage. Accordingly, merely demonstrating that the district court's ruling is questionable generally will be insufficient to support a Rule 23(f) petition in the absence of other factors supporting immediate review. See Armstrong, 138 F.3d at 1386 ("class certification decisions are left to the sound discretion of the district court, and in most cases the certification order can be effectively reviewed on appeal after final judgment") (internal citation omitted).[10]

Third, a court should consider whether the appeal will permit the resolution of an unsettled legal issue that is "important to the particular litigation as well as important in itself." Mowbray, 208 F.3d at 294. Such an issue might be one that is of moment yet is "likely to escape effective review if left hanging until the end of the case." Id. Alternatively, the issue might be one as to which an appellate ruling sooner rather than later will substantially assist the bench and bar, as may be the case when an issue is arising simultaneously in related actions involving the same or similarly-situated parties or is one that seems likely to arise repeatedly in the future. The fact that the lawsuit involves a governmental entity, or has a strong public interest component, may also lend the issue particular importance and urgency. Moreover, interlocutory review under Rule 23(f) seems more appropriate if the unsettled issue relates specifically to the requirements of Rule 23 or the mechanics of certifying a class, given that one of the primary justifications for Rule 23(f) was a concern over the perceived lack of a substantial body of case law addressing the Rule 23 standards. See Blair, 181 F.3d at 835. We reiterate, however, that a class certification decision which "turns on case-specific matters of fact and district court discretion," Comm. Note, Fed. R. Civ. P. 23 -- as most certification decisions indisputably do -- generally will not be appropriate for interlocutory review.

Fourth, a court should consider the nature and status of the litigation before the district court. Some cases plainly will be in a better pre-trial posture for interlocutory appellate review than others. As noted above, the propriety of granting or denying a class, as well as the proper scope of any class that has been granted, may change significantly as new facts are uncovered through discovery. Similarly, a limited or insufficient record may adversely affect the appellate court's ability to evaluate fully and fairly the class certification decision. Moreover, a district court's ruling on dispositive motions or a motion to add new class representatives, parties, or claims may significantly redefine the issues in the case and thereby affect the scope of or need for a class. Accordingly, the decision on a Rule 23(f) petition may take into account such considerations as the status of discovery, the pendency of relevant motions, and the length of time the matter already has been pending. In certain circumstances the court may also consider the current impact on the parties of rulings by the district court that, while not themselves subject to Rule 23(f) review, nevertheless are inextricably tied to the class certification decision. Cf. Jackson v. Motel 6 Multipurpose, Inc., 130 F.3d 999, 1007-08 (11th Cir. 1997) (reviewing petitions for writ of mandamus that challenged class certification decision as well as district court's order allowing highly prejudicial advertising and mass mailings to putative class members), reh'g denied, 167 F.3d 542 (1998).

Finally, a court should consider the likelihood that future events may make immediate appellate review more or less appropriate. Simply by way of example, settlement negotiations involving some or all of the parties affected by the decision, or the prospect of an imminent change in the financial status of a party (such as a bankruptcy filing) may caution against hearing an interlocutory appeal. Conversely, if the case is likely to be one of a series of related actions raising substantially the same issues and involving substantially the same parties, then early resolution of a dispute about the propriety of certifying a class may facilitate the disposition of future claims. Also significant is whether the district court itself has indicated that it views its class certification decision as conditional or subject to revision at a later stage in the case.

We do not create any bright-line rules or rigid categories for accepting or denying Rule 23(f) petitions today. Our authority to accept Rule 23(f) petitions is highly discretionary, and the foregoing list of factors is not intended to be exhaustive; there may well be special circumstances that lead us to grant or deny a Rule 23(f) petition even where some or all of the relevant factors point to a different result. Moreover, none of the foregoing factors is necessarily conclusive; ordinarily, each relevant factor should be balanced against the others, taking into account any unique facts and circumstances.

We reiterate, however, that interlocutory appeals are inherently "disruptive, time-consuming, and expensive," Mowbray, 208 F.3d at 294, and consequently are generally disfavored. Piecemeal appellate review has a deleterious effect on judicial administration. It increases the workload of the appellate courts, to the detriment of litigants and judges. It requires the appellate courts to consider issues that may be rendered moot if the appealing party ultimately prevails in or settles the case. It undermines the district court's ability to manage the action. And it creates opportunities for abuse by litigants seeking to delay resolution of a case by raising with the appellate court objections to the scope of an order that should have been raised first with the district court itself. Most of these concerns are, if anything, even more compelling in the class action context, especially given the district court's broad authority under Rule 23(c)(1) to monitor and if necessary reconsider its class certification decision as discovery unfolds and the action progresses to trial.

We will therefore use restraint in accepting Rule 23(f) petitions, and these interlocutory petitions will not be accepted as a matter of course.


Footnotes:

[7] These figures are not published in printed form, but are derived from information in the databases of the Federal Judicial Center in Washington, D.C.

[8] Rule 23(f) states expressly that an appeal under this provision does not stay proceedings in the district court unless the district court or the court of appeals so orders. Thus, Rule 23(f) contemplates that in most cases discovery (at the very least, merits discovery) will continue notwithstanding the pendency of an appeal of the class certification order.

[9] The more the alleged error arises out of a mistake of law (as opposed to an improper application of the law to the facts), the more the case may be susceptible to interlocutory review, simply because such an error is more readily reviewable by this Court and does not require us to base our determination on an evolving factual record that may already have become incomplete. See SunAmerica Corp. v. Sun Life Assur. Co., 77 F.3d 1325, 1333 (11th Cir. 1996) (court necessarily abuses its discretion if it "has applied an incorrect legal standard"); see also Pickett v. Iowa Beef Processors, 209 F.3d 1276, 1279 (11th Cir. 2000) (granting Rule 23(f) petition and applying de novo standard to reverse district court's interpretation of the adequacy-of-representation test of Rule 23(a)(4)).

[10] We do not mean to suggest that this factor weighs in favor of a Rule 23(f) appeal only when the party seeking interlocutory review meets the extremely demanding test applied to mandamus petitions. See Armstrong, 138 F.3d at 1386 (prior to Rule 23(f) court would issue writ of mandamus to direct district judge to take particular action regarding a class certification ruling only when the "certification order constitutes, at a minimum, a clear abuse of discretion"). Rather, this factor should be viewed as a sliding scale. The stronger the showing of an abuse of discretion, the more this factor weighs in favor of interlocutory review. We note, however, that every litigant seeking to appeal under Rule 23(f) necessarily believes that the district court has abused its discretion. Accordingly, simply alleging an abuse of discretion may not in and of itself justify an interlocutory appeal.

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[§38] Procedures for Providing Notice to the Class

Subject to court approval, the plaintiffs and their counsel are generally responsible for devising a notice program adequate to inform absent class member of the pendency and nature of the case. Only members of the class are entitled to notice of the proceedings. cf. Gould v. Alleco, Inc., 883 F.2d 281, 284 (4th Cir. 1989), cert. denied, 493 U.S. 1058 (1990). The federal rules provide that after certifying a class pursuant to Rule 23(b)(3), the court must direct to potential class members "the best notice practicable under the circumstances, including individual notice to all members who can be identified through reasonable effort." Smith v Montgomery County Maryland, 117 F.R.D. 372, 376 (D Md 1987).

The costs of class notice will vary according to the size and geographic locations of the absent class members. Further, the cost of notice may be affected by the need for and the degree of notice by publication that may be required. If national publication and mail costs are disportionate to the value of the case, class action treatment may be inappropriate. See Eisen v Carlisle & Jacquelin, 417 U.S. 156, 94 S.Ct 2140, 40 L.Ed 2d 732 (1974 ).

Generally, the cost of providing notice to the absent class members falls upon the named plaintiffs. Eisen v Carlisle & Jacquelin, 417 U.S. 156, 178-179, 94 S.Ct 2140, 40 L.Ed 2d 732 (1974). Nevertheless, the district court has discretion to allocate costs to the defendant for tasks that the court has appropriately ordered the defendant to perform. Cf. Oppenheimer Fund, Inc. v Sanders, 437 U.S. 340, 350, 355-56, 358, 98 S.Ct 2380, 2389, 2391-93 (1978). See also, Southern Ute Indian Tribe v. AMOCO Production Co., 2 F.3d 1023 (10th Cir. 1993).

Rule 23(d)(2) provides in pertinent part as follows: "In the conduct of actions to which this rule applies, the court may make appropriate orders . . .requiring, for the protection of the members of the class or otherwise for the fair conduct of the action, that notice be given in such a manner as the court may direct to some or all of the members of any step in the action, or of the proposed extent of the judgment, or of the opportunity of members to signify whether they consider the representation fair and adequate, to intervene and present claims or defenses, or otherwise to come into the action"

Depending on the grounds upon which the class action is certified, notice to the class may be either discretionary or mandatory. See Rule 23 (d)(2). The district court has wide discretion in fashioning a notice best calculated to reach the plaintiff class. See Reed v Health and Human Services, 774 F.2d 1270, 1277 (4th Cir. 1985).

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[§39] When Notice Not Required

Notice to class members in a "risk of prejudice" class action certified under Rule 23(b)(1) is discretionary. See Manual for Complex Litigation, Third 31, 21 (1995). Also, Class actions seeking declaratory or injunctive relief pursuant to Rule 23(b)(2) are not required under Rule 23(c)(2) to have notice issue. See Olenhouse v Commodity Credit Corp., 136 F.R.D. 672 (D Kan 1991).

[§40] When Notice is Mandatory

Notice in any class action based on "common questions of law" pursuant to Rule 23(b)(3) is mandatory. Rule 23(c)(2) of the Federal Rules of Civil Procedure provides that:

In any class action maintained under subdivision 23(b)(3), the court shall direct to the members of the class the best notice practicable under the circumstances, including individual notice to all members who can be identified through reasonable effort.
Specifically, Rule 23(c)(2) obligates the court to order the class representatives of a Rule 23(b)(3) action to mail individual notice to the last known address of those class members who can be identified with reasonable effort. Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 173-77, 94 S.Ct. 2140, 2150-52 (1974). "Reasonable effort" requires that:
[O]nce a 23(b)(3) action has been certified, the name and last known address of each class member known to the parties or capable of being identified from business or public records available to them must be produced. The sources or sources providing the greatest number of names and addresses must be used. Obviously, the word "reasonable" cannot be ignored. In every case, reasonableness is a function of anticipated results, costs, and amount involved. A burdensome search through records that may prove not to contain any of the information sought clearly should not be required. On the other hand, a search, even though calculated to reveal partial information or identification, may be omitted only if its cost will exceed the anticipated benefits.
In re Nissan Motor Corp. Antitrust Litigation, 552 F.2d 1088, 1098 (5th Cir. 1977). In additional to providing for the scope of the notification to the class, Rule 23(c)(2) also provides for the content of the notification:
The notice shall advise each member that (A) the court will exclude the member from the class if the member so requests by a specified date; (B) the judgment, whether favorable or not, will include all members who do not request exclusion; and (C) any member who does not request exclusion may, if the member desires, enter an appearance through counsel.
A court-approved notice should satisfy all three of these requirements. Where class members cannot be identified through reasonable efforts, Rule 23(c)(2) requires the "best notice practicable under the circumstances." Eisen, 417 U.S. at 173-77, 94 S.Ct. at 2150-52. In such situations, the best notice practicable under the circumstances is most commonly effected through the published media. See 7A C. Wright & A. Miller, Federal Practice & Procedure, 1786, at 206 (1972); Gordon v. Huret, 117 F.R.D. 58, 63 (S.D.N.Y. 1987)("combination of mailed notice to all class members who can be identified by reasonable effort and published notice to all others is the long-accepted norm in large class actions.")

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[§41] Content of Class Notice

The notice provided in any class action should clearly advise all class members of the general nature of the case, the exact name of the case, who the parties are in the litigation and where it is pending. Specific items for inclusion in the notice follow.

  • A brief description of the substance of the action and the position taken by the parties.
  • The names of the class representatives; the defendant parties’ counsel and co-counsel.
  • The relief demanded by the plaintiff’s counsel, and if the notice is of class settlement, the benefits obtained for qualifying absent class members.
  • Any agreement reached on the compensation of class counsel, attorney fees or costs if the case involves a settlement.
  • The risks associated with remaining in the class, such as the res judicata effect of any judgment.
  • A statement that the court has not ruled upon the underlying merits.
  • The procedures and deadlines for opting out, objecting or intervening in the action. See Manual for Complex Litigation Third 30.23 (1995).
  • If the notice is of a class action settlement, the procedures for filing proof of claims for compensation. See Manual for Complex Litigation, Third 30.211 (1985).

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[§42] Dissemination of Notice to the Class

Notice of a class action sent by first class mail will ordinarily satisfy Rule 23(c)(2)’s requirement that class members receive the "best notice practicable under the circumstances." See Peters v Nat’l. R.R. Passenger Corp., 966 F.2d 1483, 1486 (DC Cir. 1992). However, second class mail may also be acceptable. Oppenheimer Fund, Inc. v Sanders, 437 U.S. 340, 355 fn. 22, 98 S.Ct 2380, 57 L.Ed 2d 253 (1978). Bulk mail may also be sufficient if adequate time is permitted for delivery and the envelope prominently identifies the contents as a legal notice.

Notice sent to the last known address of absent class members will generally be sufficient as "notice reasonably calculated to apprise interested parties." Peters v Nat’l. R.R. Passenger Corp., 966 F.2d 1483, 1486 (DC Cir. 1992); see also Mullane v Central Hanover Bank & Trust Co., 339 U.S. 306, 314, 70 S.Ct 652, 94 L.Ed 865 (1950). Due process does not require actual notice to be received by parties who cannot be reasonably identified. Mullane v Central Hanover Bank & Trust Co., 339 U.S. 306, 313-19, 70 S.Ct 652, 94 L.Ed 865 (1950). Notice by publication, in effect, acts as a substitute for actual notice for purposes of meeting due process requirements.

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[§43] Opt-Out Rights in a Rule 23(b)(3) Class Action

All members in a Rule 23(b)(3) action are entitled to due process, including notice. Phillips Petroleum v. Shutts, 472 U.S. 797, 810-13, 86 L. Ed. 2d 628, 105 S. Ct. 2965 (1985). In any class action certified under Rule 23(b)(3) where the relief sought is primarily monetary, each class member has a right to exclude himself from the action. The right to participate, or to opt-out, is an individual one and should not be made by the class representatives of the class counsel. Hanlon v. Chrysler Corp., 150 F.3d 1011, 1025 (1998) citing Newberg & Conte, Newberg on Class Actions 16.16 (3d Ed. 1992)("The decision to exercise the right of exclusion in a Rule 23(b)(3) action is an individual decision of each class member and may not be usurped by the class representative or class counsel.")

Class members may also be granted the right to opt out in other types of class actions. not certified under Rule 23(b)(3). Manual for Complex Litigation, Third 30.321 (1995). The procedure for opting out of a class action should be simple, and class members should be afforded a reasonable time to exercise their option. The amount of time considered reasonable is case specific and will depend on the circumstances present in any particular case.

To exclude oneself from a class action, a claimant must generally notify the court or an authorized agent of the court in writing that the class member desires to be excluded from the action. A form for opting out may be included with the notice materials approved by the court. The information required on the exclusion request will vary depending on the circumstances of the case. At least one court has held that in the event a class member submits an opt-out form, that request for exclusion may be withdrawn if an unequivocal request to do so is submitted to the court prior to the deadline established for opting-out. See Bailey v Cost Control Marketing and Sales Management of Virginia, Inc., 132 F.R.D. 432, 437 (WD Va 1990).

If an individual opts-out of a class, the class member will not be bound by any judgment, favorable or not favorable, and will not be entitled to share in the fruits of any success the class may achieve in obtaining money or other relief for class members. An individual who opts-out of a class is no longer a class member. Therefore, having excluded oneself from the class, as a general rule, that person no longer has standing to object to the proceedings. See Mayfield v Barr, 985 F.2d 1090, 1093 (DC Cir. 1993).

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[§43.1] Attempts to Effect Opt-Outs En Masse

Spoilers or disgruntled class members have attempted in the past to improperly disrupt class proceedings by purporting to object for or opt out not only themselves, but by attempting to opt out some discernible group of people they purport to "represent." There is no class action rule, statute, or case that allows a putative class plaintiff or counsel to exercise class rights en masse, either by making a class-wide objection or by attempting to effect a group-wide exclusion from an existing class. Hanlon v. Chrysler Corp., 150 F.3d 1011, 1025 (9th Cir. 1998). Indeed, to do so would infringe on the due process rights of the individual class members who have a right to intelligently and individually choose whether to continue in a suit as class members. Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 173-77, 40 L. Ed. 2d 732, 94 S. Ct. 2140 (1974). Additionally, to allow representatives in variously asserted class actions to opt a class out without the permission of the individual class members "would lead to chaos in the management of class actions." Berry Petroleum Co v. Adams & Peck, 518 F.2d 402, 412 (2d Cir. 1975).

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[§43.2] Effect of Failure to Timely Opt-Out

In any class action certified under Rule 23(b)(3) where the relief sought is primarily monetary, any class member who does not file a timely exclusion request to opt-out of the action will be bound by any subsequent settlement or judgment. See e.g., Hansberry v. Lee, 311 U.S. 32, 85 L. Ed. 22, 61 S. Ct. 115 (1940); Phillips Petroleum v. Shutts, 472 U.S. 797, 86 L. Ed. 2d. 628, 105 S. Ct. 2965 (1985); Tice v. American Airlines, 162 F.3d 966 (7th Cir. 1998). In the event, however, a class member is unable to opt-out in a timely manner, a class member may be permitted to opt-out after the deadline upon a showing of excusable neglect for his or her failure to comply with a fixed deadline. See In re Paine Webber Limited Partnerships Litig., 147 F.3d 132 (2d Cir. 1998). Federal Rule of Civil Procedure 6(b)(2) permits a court to extend a class member's time for opting out beyond the deadline, and specifically provides:

When by these rules or by a notice given thereunder by order of court an act is required or allowed to be done within a specified time, the court for cause shown may at any time in its discretion . . . upon motion made after the expiration of the specified period permit the act to be done when the failure to act was the result of excusable neglect.
See Silber v. Mabon, 18 F.3d 1449, 1454-1455 (9th Cir. 1994). The determination whether a party's conduct constitutes "excusable neglect" is an equitable one that requires a court to consider all relevant circumstances. See Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. Partnership, 507 U.S. 380, 391-95 123 L. Ed. 2d 74, 113 S. Ct. 1489 (1993). For that reason, excusable neglect is said to be an "elastic concept." See Id. at 392. Excusable neglect may be found where the relevant circumstances reveal inadvertent delays, mistakes, or carelessness. See Id. at 388. Thus, it clearly is broad enough to encompass even those omissions caused by circumstances within the movant's control. Id. To establish excusable neglect, a movant must show good faith and a reasonable basis for noncompliance with the deadline. In weighing whether to permit an extension of time to file, the court will also consider the degree of prejudice to the opposing party. See 1 Moore, et al., Moore's Federal Practice p. 6.06[3][b] (3d ed. 1977). A district court decision granting or denying a motion for extension of time on the basis of excusable neglect is reviewable on an abuse of discretion standard. See LoSacco v. City of Middleton, 71 F.3d 88, 93 (2d Cir. 1995); United States v. Hooper, 43 F.3d 26, 29 (2d Cir. 1994)(per curiam).

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