UNITED STATES CODE ANNOTATEDRule 23. Class Actions
(a) Prerequisites to a Class Action. One or more members of a class may sue or be sued as representative parties on behalf of all 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.
(b) Class Actions Maintainable. An action may be maintained as a class action if the prerequisites of subdivision (a) are satisfied, and in addition:
(1) the prosecution of separate actions by or against individual members of the class would create a risk of
(A) inconsistent or varying adjudications with respect to individual members of the class which would establish incompatible standards of conduct for the party opposing the class, or
(B) adjudications with respect to individual members of the class which would as a practical matter be dispositive of the interests of the other members not parties to the adjudications or substantially impair or impede their ability to protect their interests; or
(2) the party opposing the class has acted or refused to act on grounds generally applicable to the class, thereby making appropriate final injunctive relief or corresponding declaratory relief with respect to the class as a whole; or
(3) the court finds that the questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy. The matters pertinent to the findings include: (A) the interest of members of the class in individually controlling the prosecution or defense of separate actions; (B) the extent and nature of any litigation concerning the controversy already commenced by or against members of the class; (C) the desirability or undesirability of concentrating the litigation of the claims in the particular forum; (D) the difficulties likely to be encountered in the management of a class action.
(c) Determining by Order Whether to Certify a Class Action; Appointing Class Counsel; Notice and Membership in Class; Judgment; Multiple Classes and Subclasses. (1)(A) When a person sues or is sued as a representative of a class, the court must--at an early practicable time--determine by order whether to certify the action as a class action. (B) An order certifying a class action must define the class and the class claims, issues, or defenses, and must appoint class counsel under Rule 23(g).
(C) An order under Rule 23(c)(1) may be altered or amended before final judgment.
(2)(A) For any class certified under Rule 23(b)(1) or (2), the court may direct appropriate notice to the class.
(B) For any class certified under Rule 23(b)(3), the court must direct to class members the best notice practicable under the circumstances, including individual notice to all members who can be identified through reasonable
effort. The notice must concisely and clearly state in plain, easily understood language: . the nature of the action,
. the definition of the class certified,
. the class claims, issues, or defenses,
. that a class member may enter an appearance through counsel if the member so desires,
. that the court will exclude from the class any member who requests exclusion, stating when and how members may elect to be excluded, and
. the binding effect of a class judgment on class members under Rule 23(c)(3).
(3) The judgment in an action maintained as a class action under subdivision (b)(1) or (b)(2), whether or not favorable to the class, shall include and describe those whom the court finds to be members of the class. The judgment in an action maintained as a class action under subdivision (b)(3), whether or not favorable to the class, shall include and specify or describe those to whom the notice provided in subdivision (c)(2) was directed, and who have not requested exclusion, and whom the court finds to be members of the class.
(4) When appropriate (A) an action may be brought or maintained as a class action with respect to particular issues, or (B) a class may be divided into subclasses and each subclass treated as a class, and the provisions of this rule shall then be construed and applied accordingly.
(d) Orders in Conduct of Actions. In the conduct of actions to which this rule applies, the court may make appropriate orders: (1) determining the course of proceedings or prescribing measures to prevent undue repetition or complication in the presentation of evidence or argument; (2) 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 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; (3) imposing conditions on the representative parties or on intervenors; (4) requiring that the pleadings be amended to eliminate therefrom allegations as to representation of absent persons, and that the action proceed accordingly; (5) dealing with similar procedural matters. The orders may be combined with an order under Rule 16, and may be altered or amended as may be desirable from time to time.
(e) Settlement, Voluntary Dismissal, or Compromise.
(1)(A) The court must approve any settlement, voluntary dismissal, or compromise of the claims, issues, or defenses of a certified class.
(B) The court must direct notice in a reasonable manner to all class members who would be bound by a proposed settlement, voluntary dismissal, or compromise.
(C) The court may approve a settlement, voluntary dismissal, or compromise that would bind class members only after a hearing and on finding that the settlement, voluntary dismissal, or compromise is fair, reasonable, and adequate.
(2) The parties seeking approval of a settlement, voluntary dismissal, or compromise under Rule 23(e)(1) must file a statement identifying any agreement made in connection with the proposed settlement, voluntary dismissal, or compromise.
(3) In an action previously certified as a class action under Rule 23(b)(3), the court may refuse to approve a settlement unless it affords a new opportunity to request exclusion to individual class members who had an earlier opportunity to request exclusion but did not do so.
(4)(A) Any class member may object to a proposed settlement, voluntary dismissal, or compromise that requires court approval under Rule 23(e)(1)(A).
(B) An objection made under Rule 23(e)(4)(A) may be withdrawn only with the court's approval.
(f) Appeals. 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.
(g) Class Counsel.
(1) Appointing Class Counsel.
(A) Unless a statute provides otherwise, a court that certifies a class must appoint class counsel.
(B) An attorney appointed to serve as class counsel must fairly and adequately represent the interests of the class.
(C) In appointing class counsel, the court (i) 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 claims of the type asserted in the action,
. counsel's knowledge of the applicable law, and
. the resources counsel will commit to representing the class;
(ii) may consider any other matter pertinent to counsel's ability to fairly and adequately represent the interests of the class;
(iii) may direct potential class counsel to provide information on any subject pertinent to the appointment and to propose terms for attorney fees and nontaxable costs; and
(iv) may make further orders in connection with the appointment.
(2) Appointment Procedure.
(A) The court may designate interim counsel to act on behalf of the putative class before determining whether to certify the action as a class action.
(B) When there is one applicant for appointment as class counsel, the court may appoint that applicant only if the applicant is adequate under Rule 23(g)(1)(B) and
(C). If more than one adequate applicant seeks appointment as class counsel, the court must appoint the applicant best able to represent the interests of the class.
(C) The order appointing class counsel may include provisions about the award of attorney fees or nontaxable costs under Rule 23(h).
(h) Attorney Fees Award. In an action certified as a class action, the court may award reasonable attorney fees and nontaxable costs authorized by law or by agreement of the parties as follows:
(1) Motion for Award of Attorney Fees. A claim for an award of attorney fees and nontaxable costs must be made by motion under Rule 54(d)(2), subject to the provisions of this subdivision, at a time set by the court. Notice of the motion must be served on all parties and, for motions by class counsel, directed to class members in a reasonable manner.
(2) Objections to Motion. A class member, or a party from whom payment is sought, may object to the motion.
(3) Hearing and Findings. The court may hold a hearing and must find the facts and state its conclusions of law on the motion under Rule 52(a).
(4) Reference to Special Master or Magistrate Judge. The court may refer issues related to the amount of the award to a special master or to a magistrate judge as provided in Rule 54(d)(2)(D).
Tuesday, December 7, 2010
WAL-MART v. DUKES, THE SUPREME COURT IS RECONCILING RULE 23 (CLASS ACTIONS)
Yesterday the Supreme Court issued an Order in the case of Wal-Mart Stores, Inc., Petitioner v. Betty Dukes, et al. This case is the largest employment class action case in history.
The Court limited the parties in the case to the first question presented by the petitioner in their Petition for Certiorari. That question is: "Whether claims for monetary relief can be certified under Federal Rule of Civil Procedure 23(b)(2)—which by its terms is limited to injunctive or corresponding declaratory relief—and, if so, under what circumstances." In addition the Court asked the parties to brief and argue "[w]hether the class certification ordered under Rule 23(b)(2) was consistent with Rule 23(a)."
This case began in June, 2001 when Betty Dukes filed a pro se complaint against Wal-Mart in the United States District Court for the Northern District of California in San Francisco, California. The plaintiff's central claim is that "thousands of local managers intentionally discriminated against women in making millions of individualized, allegedly subjective pay and promotion decisions. They seek "billions" in back pay and punitive damages under Title VII." Quote taken from Wal-Mart's Petition for Rehearing En Banc before the Ninth Circuit Court of Appeals.
Title VII refers to Title VII of the Civil Rights Act of 1964 which prohibits employment discrimination based on race, color, religion, sex and national origin.
At the trial level the district court certified a class under Rule 23(b)(2) of the Federal Rules of Civil Procedure. This is a class of over 1.5 million women, employed over a five-year period at approximately 3,400 Wal-Mart stores. The plaintiffs claimed that Wal-Mart discriminated against women by paying them less than Wal-Mart paid men for performing the same work and women received fewer in store promotions leading to management than did male employees.
The trial court created a separate opt-out class encompassing the same employees for punitive damages. That means class members who did not want a share of any punitive damages, if any, could opt-out of receiving their share of such damages. Remember that punitive damages in civil law are similar to criminal sanctions in the penal code. Each are designed to deter future harmful conduct by those who would commit the offending acts in the future.
Even though the class is extremely large, the claims it presents are not. The class is seeking only pay and promotion and those claims are limited to Title VII. The Plaintiffs want injunctive and declaratory relief for the class, lost pay and punitive damages, but did not seek compensatory damages. The Ninth Circuit affirmed the District Court.
The first question the Court wants to look at is the issue of certifying monetary damages under Rule 23(b)(2). That is "(b) Class Actions Maintainable. An action may be maintained as a class action if the prerequisites of subdivision (a) are satisfied, and in addition: (2) the party opposing the class has acted or refused to act on grounds generally applicable to the class, thereby making appropriate final injunctive relief or corresponding declaratory relief with respect to the class as a whole;"
The Second question the Court has directed the parties to present is whether Rule 23(b)(2) is consistent with consistent with Rule 23(a). That is "(a) Prerequisites to a Class Action. One or more members of a class may sue or be sued as representative parties on behalf of all 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." Rule 23(a) is the threshold applicable to all class action suits.
When you read Rule 23 you will not find any provision certifying monetary damages. Those issue are subordinate to issues of law. Title VII claims give rise to monetary damages. A class action certified pursuant to 23(b)(2) provides for equitable relief under Title VII. The Court is asking whether that limits the Title VII relief to the damages in equity or whether the provisions of Rule 23(a) permit monetary damages because the parties' Title VII claims are, to the class, common questions of law; the Title VII claims of the named plaintiffs are typical to the class; and are those Title VII claims of the class being fairly and adequately protected by the representative parties.
The Court may be considering a modification to Rule 23 to better clarify which monetary damages can be awarded by class action law suits. This case is far from over.