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The issue of attorney fees has long been considered for Erie purposes to be substantive and not procedural.

Over time, the courts have shifted their views on the correct approach to computing attorney fees under a common fund theory—use of a lodestar or use of a percentage of the common fund. Prior to the 1970s, the federal courts awarded fees in common fund cases based on a percentage of the benefit conferred.⁸⁶ From 1973 to around 1985, the lodestar method, often with a multiplier, was temporarily in vogue in the federal courts.⁸⁷

A class action complaint must include a separate and specific class definition.¹ This section of the complaint is critical to both class certification and identification of—and notice to—class members.

Ideally, the class definition proposed to the court when seeking certification will be comprised only of persons who were exposed to and injured by the practice challenged in the case. However, for a variety of reasons, this sometimes is not possible. The information necessary to craft a perfect definition may not be available to the plaintiffs’ counsel.

Definitions that require individual factual determinations or that entail individual legal issues should be avoided or kept to an absolute minimum. The more individual issues that arise, the more likely the defendant’s challenge to class certification will succeed.

In most instances, courts require that a class definition include a firm starting date for class membership. The statute of limitations on the legal claims being asserted will often, though not always, provide the applicable starting date. If the alleged activities took place during a discrete period of time that is wholly within all applicable statutes of limitations, a recital in the complaint explaining the time period involved is appropriate, but this recital does not need to become part of the class definition.

Time limitations that are shorter than the applicable statutes of limitations may be necessary or desirable in a class definition for numerous reasons: the defendant’s practices may have begun on a more recent date; the defendant may have been routinely destroying its records after a certain period of time³²; or a specific date may constitute an essential element of the claim—for example, when the claim is based on a statute that applies only to transactions after a certain date.

The plaintiff must also consider whether to include a closing date in the class definition. This choice will often depend on various factors—for example, the continuing nature and extent of the defendant’s practices, whether the plaintiff wishes to force the defendant to change its practices, whether there is a cap on statutory damages, and the manageability of a continuing class that increases in number as the litigation continues. Another consideration is whether the class should be defined to include future members. Doing so can prevent or help overcome a numerosity challenge.

One of the most problematic questions when choosing a class definition arises from the “multistate class” issue. Many defendants transact business in multiple states, or even nationwide, and the plaintiff’s attorney will have to decide whether to limit the class to only consumers residing in one state, to include those in certain selected states, or perhaps to seek nationwide certification. This is a tactical and practical question that has become even more important in light of the Class Action Fairness Act’s federalization of a large majority of class action lawsuits.

If the claim at issue in the case arises under a federal statute, then a multistate class does not raise choice-of-law issues. The primary disadvantage of a multistate class would then be the substantial increase in the costs of potential notice and the administrative and practical concerns that can come out of having a far larger class, one that is spread across many states. These concerns may seem remote at the commencement of the case, but, in practical terms, obtaining documents or testimony or communicating with class members in many states can become time consuming and expensive.

“In addition to asking whether there are objective criteria by which class membership may be determined, [the First, Third, Fourth, and Sixth Circuits] also require that the class certification proponent demonstrate that the analysis of class membership be ‘administratively feasible,’ while [the Second, Seventh, Eighth, Ninth, and Eleventh Circuits] have explicitly rejected the administrative feasibility inquiry or have a more relaxed approach to it.

Rule 23(c)(5) states that, “[w]hen appropriate, a class may be divided into subclasses that are each treated as a class under this rule.” The 1966 Advisory Committee Note to the original version of this provision (formerly Rule 23(c)(4)(B)) reveal that this provision was intended as a mechanism for preventing uncommon issues from making a class action unmanageable on the one hand or preventing certification on the other.¹⁰⁴

Defendants will sometimes move to strike all or portions of a class definition for one reason or another, relying on Federal Rule of Civil Procedure 12(f), which authorizes a motion to strike “from a pleading . . . any . . . immaterial . . . matter.” Generally, courts deny such motions as more appropriately considered at the time class certification is decided.¹²⁰

(a) Prerequisites. One 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

Note to Subdivision (a). This is a substantial restatement of [former] Equity Rule 38 (Representatives of Class) as that rule has been construed. It applies to all actions, whether formerly denominated legal or equitable. For a general analysis of class actions, effect of judgment, and requisites of jurisdiction see Moore, Federal Rules of Civil Procedure: Some Problems Raised by the Preliminary Draft, 25 Georgetown L.J. 551, 570 et seq. (1937); Moore and Cohn, Federal Class Actions, 32 Ill. L. Rev.

Subdivision (b), relating to secondary actions by shareholders, provides among other things, that in, such an action the complainant “shall aver (1) that the plaintiff was a shareholder at the time of the transaction of which he complains or that his share thereafter devolved on him by operation of law . . .”.

Difficulties with the original rule. The categories of class actions in the original rule were defined in terms of the abstract nature of the rights involved: the so-called “true” category was defined as involving “joint, common, or secondary rights”; the “hybrid” category, as involving “several” rights related to “specific property”; the “spurious” category, as involving “several” rights affected by a common question and related to common relief.

The amendments are technical. No substantive change is intended.

Subdivision (f). This permissive interlocutory appeal provision is adopted under the power conferred by 28 U.S.C. § 1292(e). Appeal from an order granting or denying class certification is permitted in the sole discretion of the court of appeals. No other type of Rule 23 order is covered by this provision. 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. This discretion suggests an analogy to the provision in 28 U.S.C.

The third of the three bases upon which a court may certify a class comes into play if all the requirements of Federal Rule of Civil Procedure 23(a) are met, and, in addition:

(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:

There is disagreement among federal courts on the criteria that control whether an issue class can be certified under Rule 23(c)(4) in cases seeking certification under Rule 23(b)(3). The main conflict among courts is how the predominance and superiority requirements of Rule 23(b)(3) apply to issue classes. Four circuits—the Second, Fourth, Sixth, and Ninth—apply the Rule 23(b)(3) predominance and superiority prongs to the common issues that have been identified for class treatment under Rule 23(c)(4).

A number of federal rules and their state counterparts limit a defendant’s ability to improperly delay a class action. Federal Rule of Civil Procedure 11 states that, whenever an attorney presents the court with a pleading, motion, or other paper, the attorney is certifying, based on a reasonable inquiry, that the paper is not being presented to unnecessarily delay or increase the cost of the litigation, to harass, or for any other improper purpose.

If the defendants cannot win the case by a motion to dismiss or motion for summary judgment, they may be amenable to a settlement without trial. The likelihood of settlement increases significantly if the court grants class certification, but a case that is legally and factually strong often draws settlement talks even prior to certification. This chapter discusses many of the considerations that the plaintiff’s counsel should bear in mind during settlement discussions at any step of the litigation, starting with two guiding principles:

A class action should never be filed with the intention of leveraging a favorable individual settlement using the “threat” of class treatment as a club against a defendant. Nonetheless, the subject of a possible individual settlement sometimes arises. Particularly when the defendant has broached this subject, counsel should be wary of agreeing readily to negotiation. The fact that the defendant wishes to settle quickly may be a reflection of its perceived liability on a broader basis to the class.

In many suits filed as class actions, the parties agree to settle on behalf of a class before the court rules on certification. The rationale for such settlement at this stage is that class certification is itself a litigation risk for both plaintiffs and defendants. For many class actions, particularly consumer cases in which the individual claims at issue may be relatively small, not being certified on a classwide basis could effectively doom the chances for any recovery by any members of the putative class.