Teaching Class Action Lawsuits

Danny Karon, your Lovable Lawyer, teaches about class action lawsuits:

“Class actions are cases sued by one, two, or three people on behalf of lots of people.

My point is to prepare you and not to scare you from class action cases because they are accessible, attainable, achievable, and winnable if you peruse them responsibly.

There are a lot of bad cases out there and we don’t want to be involved in those. Bad cases ruin it for the good ones because the laws change, the courtroom doors close, access to justice withers, and there’s nothing left for the cases that require remedies.

We’ll talk about good cases responsibly pursued and how best to do that as an attorney or a consumer. Just because you have something happen, like the cable company screwing you over or the credit card company overcharging you or dropping your phone and breaking the screen, it doesn’t mean you have a good class action case. You have to channel the facts through Rule 23 or Federal Rule 23. These control what is or isn’t and does or doesn’t qualify as a class action. This will help you determine whether you want to make it an individual case or a big case on behalf of yourself and everybody else.

Learn a little more about Rule 23 and what you need to consider when considering a class action.

There are three implicit requirements of Rule 23:

• Live Controversy – The first is that you have to have a live controversary. Something wrong has to be underway. If the issue has been resolved, there’s not much left to do as a consumer or as a lawyer. This requirement derives from the prisoner cases. If someone is complaining about prison conditions, yet he has been let out of prison already, he doesn’t have a live controversary or an article three standing to sue a prisoner rights case.
• Class Member – The second thing is that you have to be a class member. For example, I mentioned iPhones earlier. If you want to make a case because iPhones don’t have a lot of screen integrity or the glass isn’t sufficient for the use intended but you have an Android, you can’t sue Apple. You aren’t a class member.
• Definable Case – Third, you have to have a definable class, a class you can articulate, express, or describe. For instance, if you want to sue on behalf of all people whom against the defendant acted negligently, you can’t define that class unless you prove the case and find out who has the negligence claim. That’s what’s called a fail-safe class. You cannot have a class that can’t be defined unless you’ve already resolved the case. It has to be objective, such as all people who’ve purchased iPhones.There was a lot of hubbub a few years ago about whether a class like people who own iPhones is itself sufficient. You can objectively describe the class but you don’t really know who those people are or how to find them. There was a court in the third circuit that said you need names and addresses or you can’t adequately or properly define a class under Rule 23’s implicit requirement. People went nuts because that suggested the end of consumer cases. You don’t walk into a store and give them your name unless you pay with a credit card. Often you pay with cash and you don’t keep a receipt. That third circuit theory did not really take root. The third circuit realized they went too far and circuits across the country didn’t buy into it. This was pertaining to the case Bayer vs. Carrera involving a weight loss drug purchased in CVS in Pennsylvania.

These are the articulated requirements of Rule 23:

• Numerosity – You have to have enough folks. The case law suggests that 40 or more is probably enough. Less than that probably won’t support a class.
• Commonality – This asks if the same thing happened to everyone in generally the same way. Is there cohesiveness among the class? Did the cause of action arise from a common nucleus of operative fact?
• Typicality – This focuses on the class representative, the name plaintiff. It asks the class rep if they are typical of all the other folks they are representing. Do they want the same thing as the others? Did the same thing happen to them? For instance, if the class rep is subject to unique defense, like they blew the statute of limitations or something, they are not typical.
• Adequacy – This looks at the class representative and asks if he or she is the right person to adequately do the job on behalf of the class. Adequacy looks at things a little more personal to the class representative. For example, if you have a felon for a class representative, you could probably do better. If you have a really close relative as a class rep, that could be a problem. You want to make sure you have the right representative.The second part of adequacy looks at the lawyer. Is the lawyer the right person to be handling the case? Do they have the class action chops to pull it off? Have they done this type of work before? Do they have the money to pay for it? Do they have the experience? When lawyers are first starting out, the answer to all of those questions is no. So, they hook up with other lawyers and collaborate. Lawyers put together their own combination of professionals for purposes of the case.

Those are the four prerequisites that are required as part of every single class certification consideration. You can’t just show up with a case and say “I want this to be a class action.” You have to demonstrate its suitability for class certification under Rule 23 before the judge will certify it.

There are three types of cases that are typically well suited for class treatment, described under 23b:

• 23b1a – Individual cases risk the possibility of incompatible standards of conduct. Unless you get one ruling from one judge, you can have rulings potentially all over the country requiring the defendant to do all sorts of different things. This typically relates to cases involving how utility companies act towards customers. How a company acts towards me, it should act towards everyone else who uses that utility (water, electric, etc.). Another example is drug related cases. You have to have the same label on drugs nationwide or it’s going to be a mess.
• 23b1b – Cases involving a limited fund. If there’s only a certain, discreet amount of money to go around, you want everybody thrown in to get their fair share. An example could be an asbestos case or a bad drug case. If everybody’s dipping into what the company has to pay out, at the end of the line, a lot of folks will be left with nothing. Those are often cases that are well suited for class treatment.
• 23b2 – This discusses cases for declaratory or injunctive relief. Civil rights cases fall under 23b often. For example, a case for the police to stop mistreating folks. There shouldn’t be an individual set of requirements as it concerns one person. It should be a police force-wide policy.Another example is if a chemical plant is chugging toxic fumes into an adjacent neighborhood or contaminating groundwater. If someone sues and says “stop ruining my neighborhood, my air, and my water,” the plant needs to stop ruining everybody’s neighborhood, air, and water because they’re all part of the community. That is a good opportunity for a b2 class.
• 23b3 – The class we see most often are cases under 23 b3 for money damages. They typically blow up and are settled for tons of money. Because of that, the requirement for getting certified is a lot harder. There are two extra requirements in addition to those expressed in 23a that get triggered when you’re suing a 23b3 class for money damages:
• Factual Predominance – This is the kiss of death for most cases. 99% of class cases go here to die. We’re going to focus on consumer cases because these are the most accessible. When you sue for money damages, you have to demonstrate predominance. You have to show that the common questions predominate over whatever else the class might be said to be individualized among class members. For example, let’s say you have a breach of contract case – everybody’s got the same standard form contract and everyone had it breached in the same way by the defendant. You might have class members with different hair colors, eye colors, heights, and weights. They have a lot of individual characteristics among them but none of that is germane to the claim. What is germane to a contract claim, and predominates over anything individualized, is that they were promised A and got A-. That effects everybody the same way.

In contrast to that, let’s say you have a common law fraud case. One of the elements of common law fraud is that you have to have relied on the defendant’s alleged misrepresentation or lie. How do you know whether one person relied on what they were told versus someone else having relied on what he or she was told? You have to ask everyone what they saw, heard, felt, and believed. You have to ask everyone whether they relied on what the defendant allegedly lied on and that’s going to kill class every time. Good class action lawyers never sue common law fraud claims and try to get them certified for this reason.

• Legal Predominance – Common legal questions need to predominate. If you have 50 state’s laws at play, you’ll make the judge nuts. If you don’t have a predominance of legal issues, you have individual legal issues concerning what laws apply to folks in what states, that will never get certified.
• Superiority – You have to demonstrate that a class action is the way to go and that it’s superior to individualized adjudication. For example, if people don’t want to sue their own cases, the money’s not big enough, or it would be a pain for the courts any other way. You have to prove that a class action is the right, smart, and sensible thing to do. This is usually a pretty easy element to get past.

That’s the quick rundown on what to consider when considering a class action case.”