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Consumer Class Actions: 10.3.4.8 Substitution and Intervention of Class Representatives

If the named plaintiff is bought off, dies, or a serious challenge to their adequacy arises—for example, because their claim is defeated on grounds peculiar to the named plaintiff or they fail to perform their duties—another putative class member may be substituted as class representative and permitted to take over prosecution of the case.320 The factors affecting the resolution of this issue differ depending on whether it arises before or after the class is certified.321 The issue can arise

Consumer Class Actions: 10.3.4.9 Subclasses

Subclasses may be mandated when different segments of the class have interests that differ from, and are in conflict with, those of the class representative339 or when some class members have been harmed by the same conduct that benefitted other class members.340 However, subclasses are not required for every possible conflict.341

Consumer Class Actions: 10.4.1 Overview

Federal Rule of Civil Procedure 23(b)(1) provides for class certification if the requirements of Rule 23(a) are met and if prosecuting separate actions by or against individual class members would create a risk of:

(A) inconsistent or varying adjudications with respect to individual class members that would establish incompatible standards of conduct for the party opposing the class; or

Consumer Class Actions: 10.4.2 Certification Under Rule 23(b)(1)(A)

The Supreme Court has noted in passing that Rule 23(b)(1)(A) “takes in cases where the party is obliged by law to treat the members of the class alike (a utility acting toward customers; a government imposing a tax), or where the party must treat all alike as a matter of practical necessity (a riparian owner using water as against downriver owners).”345 As one commentator has noted, there are a number of reasons why courts traditionally have been reluctant to certify mandatory classes under Rule 23(b)(1)(A):

Consumer Class Actions: 10.5.1 Relative Advantages of Rule 23(b)(2) Versus Rule 23(b)(3) Class Actions

Rule 23(b)(2)364 authorizes certification of a class action when “the party opposing the class has acted or refused to act on grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole.”365 Rule 23(b)(2) differs both substantively and procedurally from the more commonly used damages class under Rule 23(b)(3).

Consumer Class Actions: 1.9.3.2 Named Plaintiff’s Standing to Sue Multiple Defendants

The mere fact that numerous companies or firms engaged in the same alleged violation as the company with which the plaintiff dealt does not give the plaintiff standing to sue the other companies or firms and name them as defendants. In LaMar v. H&B Novelty & Loan Co.,204 for example, the plaintiff had a claim for Truth in Lending violations against a pawnshop. He sought to sue not only the pawnshop where he borrowed money but all other pawnshops in the jurisdiction that engaged in the same alleged practices.

Consumer Class Actions: 10.5.2.1 Generally

In order to pursue injunctive relief, plaintiffs must allege an injury that is “actual and imminent, not conjectural or hypothetical.”375 Then, once the Rule 23(a) requirements are satisfied, two additional elements must be met under Rule 23(b)(2): (1) the party opposing the class must have acted on grounds generally applicable to the class; and (2) final injunctive or corresponding declaratory relief must be requested.376 In analyzing these elements and determining whether a Rule 23(b)(2) c

Consumer Class Actions: 10.5.2.2 Acting or Refusing to Act on Grounds Generally Applicable to the Class

Although the party opposing the class must have acted or refused to act on grounds generally applicable to all class members, the conduct in question does not need to be directed at or damaging to each member of the class.382 The 1966 Advisory Committee Notes accompanying the amendment to Rule 23(b)(2) state that “action or inaction is directed to a class within the meaning of this subdivision even if it has taken effect or is threatened only as to one or a few members of the class, provided it is based on grounds which have general applica

Consumer Class Actions: 10.5.2.3 Final Injunctive Relief

The second basic requirement of class certification under Rule 23(b)(2) is that “final relief of an injunctive nature or a corresponding declaratory nature, settling the legality of the behavior with respect to the class as a whole” must be appropriate.391 The plain language of Rule 23(b)(2) makes clear that it is only appropriately used if final injunctive-type relief will be sought.

Consumer Class Actions: 10.5.2.4 Corresponding Declaratory Relief

The authorization under Rule 23(b)(2) for class action treatment of claims involving “final injunctive relief or corresponding declaratory relief” raises the question of what type of declaratory relief is allowed to be pursued under its provisions.403 The Advisory Committee defined “corresponding declaratory relief” as referring to a remedy that “as a practical matter . . .

Consumer Class Actions: 10.5.4.1 Generally

Courts have approved several innovative strategies for using Rule 23(b)(2), which provide significant opportunities for creative consumer lawyers. These creative strategies are as follows: (1) Rule 23(b)(2) certification with court-ordered notice and opt-out requirements; (2) hybrid, also called split or divided, certification; and (3) issue certification. These options make the availability of Rule 23(b)(2) attractive in numerous factual and legal circumstances as they may permit a court to enjoin wrongful conduct as well as compensate consumers who have suffered pecuniary injury.

Consumer Class Actions: 10.5.4.3 Hybrid Certification

A second approach is hybrid or bifurcated certification,456 which means that a class is certified for equitable relief purposes as a Rule 23(b)(2) class, while a separate certification under Rule 23(b)(3) for damages is requested for some or all of the Rule 23(b)(2) class members in the same action, sometimes simultaneously and sometimes later.457 Hybrid certification has the advantage of deferring notice and opt out until a finding of liability has been made.

Consumer Class Actions: 10.6.1 Text of Rule 23(b)(3)

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:

Consumer Class Actions: 14.11.1 Separate Negotiation of Fees

In a fee-shifting case, if the defendant will agree, the plaintiff’s attorney should negotiate settlement for the class first and, only after that, attorney fees.326 The bifurcation of negotiation for class benefits from the negotiation of fees theoretically separates the plaintiff’s attorney’s personal interest in fees from the obligation to maximize the benefits to the class. This is considered the recommended practice.

Consumer Class Actions: 10.6.2.5.1 Introduction

Federal courts exercising diversity jurisdiction must apply the choice-of-law rules of the forum state to determine the law that will govern the substantive issues of the case.517 A proposed multistate class action may be found unmanageable if, under the choice-of-law principles of the forum state, the laws of many states have to be applied at trial.518 However, some multistate class actions pass muster because the laws of the various states do not differ materially.

Consumer Class Actions: 10.6.2.5.2 Manageability when the governing law is substantially uniform among the states

Multistate classes have been certified over defense objections when the purported differences in state law are not “material”—that is, they are not sufficiently significant to defeat a cause of action on behalf of class members subject to various states’ laws. In some substantive areas, this task is not difficult. For example, when breach of contract is alleged, the principles of contract construction—such as those mandating that defendants must deliver what they promise—are very nearly uniform across states.538