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Consumer Class Actions: Discussion

For classes certified under Rule 23(b)(3), Rule 23(c)(2)(B) provides that the notice must be “the best notice that is practicable under the circumstances, including individual notice to all members who can identified through reasonable effort.” Instead of directing a specific means of notice, Rule 23(c)(2)(B) “relies on courts and counsel to focus on the means or combination of means most likely to be effective in the case before the court.”138 It specifies: “The notice may be by one or more of the following: United States mail, electronic

Consumer Class Actions: Guideline

Class counsel should approach settlement discussion with a presumption against using claim forms, so that claim forms are used only where necessary.

Claim forms should not be used when the identity and location of class members can be determined from the defendant’s records, or when relief provided by the settlement is an account credit in an amount that the defendant can administer based on its records.

Consumer Class Actions: Discussion

Claim forms are sometimes used in class action settlements to identify class members and to determine the amount of relief to which class members are entitled. Although claim forms may in some circumstances be an appropriate means to ensure equitable distribution of damages, claim forms and claiming procedures can reduce the number of class members who recover, and the amount paid by the defendant.

Consumer Class Actions: Guideline

  • 1. Class members subject to a class action settlement may object to it. Lawyers representing objectors to a proposed class action should aim either to improve the settlement’s terms or to convince the court to reject the settlement.
  • 2.

Consumer Class Actions: Discussion

By protecting the interests of the absent class members, valid objections to settlements play an important role in class action practice.

1. Benefits of meritorious objections

Consumer Class Actions: Guideline

Reasonable attorney fees must be awarded in consumer class actions so that lawyers have sufficient incentive to undertake the substantial risks involved in privately enforcing consumer protection laws.

Consumer Class Actions: Discussion

Attorney’ fees are an important component of consumer class actions. If fee awards are too low, attorneys will not have the incentive to undertake consumer class claims on a contingent basis. The public-policy goals furthered by worthy class actions, which include recovering money for consumers and deterring illegal conduct by defendants, cannot be achieved without the promise of reasonable fees when successful. On the other hand, fee awards that are too high do not serve the best interests of the class members and have led to criticism of class actions in general.

Consumer Class Actions: Guideline

All class action settlements provide class counsel authority to evaluate whether the defendant is complying with the settlement terms and, if necessary, to enforce them. Class counsel should seek post-resolution protections for the class, such as periodic reporting on compliance by the defendant to class counsel, to be included in the court order.

Consumer Class Actions: Discussion

Class counsel’s duty to monitor the implementation and enforcement of class action settlements raises a number of important considerations. In settlement negotiations, class counsel must address the parties’ roles in implementing the settlement and monitoring compliance with its requirements.

Consumer Class Actions: Guideline

Class actions involving homeownership demand special attention because of the economic and personal value of homeownership to affected class members, which raises the stakes of their participating, or failing to participate, in these cases. Consumer advocates in class action cases involving homeownership should:

Consumer Class Actions: Discussion

Class actions involving homeownership differ from other consumer class actions in important respects. For most consumers, their home is by far their biggest asset, and losing a home and its equity can ruin a family financially. Foreclosures can have a devastating effect on the stability of families and communities.180 Home cases also are different from other consumer cases because mortgage finance involves complex, long-term transactions with high exit costs for refinancing.

Consumer Class Actions: Introduction

This appendix reprints Federal Rule of Civil Procedure 23 and also reprints the notes of the advisory committee on rules from 1937, 1966, 1987, 1998, 2003, 2007, 2009, and 2018. A redlined version of Rule 23 highlighting the 2018 changes is available with this treatise’s digital version under “Primary Sources.” The substantive amended provisions primarily address issues related to: (1) settlements; (2) objections; (3) objector fees; and (4) notice to the class.

Consumer Class Actions: Federal Rule of Civil Procedure 23. Class Actions

(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

Consumer Class Actions: Notes of Advisory Committee on Rules—1937

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.

Consumer Class Actions: Notes of Advisory Committee on Rules—1946 Amendment

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 . . .”.

Consumer Class Actions: Notes of Advisory Committee on Rules—1966 Amendment

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.

Consumer Class Actions: Committee Notes on Rules—1998 Amendment

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.

Consumer Class Actions: Committee Notes on Rules—2003 Amendment

Subdivision (c). Subdivision (c) is amended in several respects. The requirement that the court determine whether to certify a class “as soon as practicable after commencement of an action” is replaced by requiring determination “at an early practicable time.” The notice provisions are substantially revised.