Monday, February 05, 2007

(b)(1)(A) Begone!

If a statute or rule serves no purpose, then the statute or rule should be abolished. That's how we feel about Federal Rule of Civil Procedure 23(b)(1)(A) -- the provision allowing a class action to be certified if "the prosecution of separate actions . . . would create a risk of . . . inconsistent or varying adjudications . . . which would establish incompatible standards of conduct for the party opposing the class." This provision serves no purpose, and it should be eliminated.

Rule 23(b)(1)(A) does not provide a remedy unavailable under the other class action provisions. If the named plaintiff in a class action wants to seek an injunction or declaratory relief, that remedy is available under Rule 23(b)(2). There's no need for (b)(1)(A) there.

If the named plaintiff in a class action wants to recover money damages, that remedy is available under Rule 23(b)(3). There's no need for (b)(1)(A) there.

Moreover, most of the case law holds that complaints seeking to recover money damages cannot properly be certified for class treatment under Rule 23(b)(1)(A). See, e.g., In re Dennis Greenman Sec. Litig., 829 F.2d 1539 (11th Cir. 1987); La Mar v. H&B Novelty & Loan Co., 489 F.2d 461 (9th Cir. 1973); In re Copley Pharm., Inc., "Albuterol" Prod. Liab. Litig., 158 F.R.D. 485 (D. Wyo. 1994). That rule makes good sense: If classes seeking damages could be certified under Rule 23(b)(1)(A) because of a risk of creating incompatible standards -- a defendant might win one case and lose another -- then Rule 23(b)(1)(A) would displace Rule 23(b)(3), which is the traditional route for seeking damages in class actions. Rule 23(b)(3), however, accords absent class members more protection than does Rule 23(b)(1)(A); Rule 23(b)(3) requires that absent class members be given notice and and the opportunity to opt out of the class. Rule 23(b)(1)(A) thus should not be read to render Rule 23(b)(3) superfluous.

If Rule 23(b)(1)(A) doesn't provide a remedy unavailable elsewhere, the Rule might nonetheless serve a purpose. Perhaps it protects the interest of some litigant not otherwise protected. But we don't see that either.

(b)(1)(A) doesn't protect defendants. Although the Rule says that it is protecting the interest of the "party opposing the class" (which is almost always the defendant), we don't see defendants begging to have classes certified against them. Typically, the defendant opposes plaintiff's motion for class certification; the court certifies a class, if at all, over the defendant's objection. Thus, (b)(1)(A) is not protecting defendants in any way that defendants care to be protected.

Rule 23(b)(1)(A) is also not protecting the named plaintiff in the (b)(1)(A) complaint. If the named plaintiff in a class action wants to obtain classwide declaratory relief that cannot be upset by a later plaintiff seeking different declaratory relief, the named plaintiff has a vehicle for doing so. The named plaintiff can proceed under Rule 23(b)(2) and obtain a declaration that binds all similarly situated people.

If (b)(1)(A) does not protect the named plaintiff filing the first complaint for declaratory relief, perhaps it protects later potential plaintiffs. Perhaps (b)(1)(A) protects later litigants who might want to sue for different declaratory relief than that recovered by the first plaintiff. But (b)(1)(A) isn't aimed at that problem, either. To the contrary, the Rule is meant to undercut later litigants. The Rule prevents later plaintiffs from undoing declarations obtained by earlier litigants.

If (b)(1)(A) serves no independent purpose, why keep it?

We have two thoughts. First, courts could interpret (b)(1)(A) to protect the "party opposing the class" -- typically, defendants. If a plaintiff moves for class certification under (b)(1)(A) and the defendant opposes the motion, then the court should deny class certification -- because the party "opposing the class" has chosen not to invoke the protection of the Rule. If, however, a defendant wants a class to be certified against it -- to protect the defendant from being subject to "incompatible standards" -- then the court could grant certification. That interpretation at least gives the language of the Rule some meaning.

If, however, courts choose not to read Rule 23(b)(1)(A) to protect defendants, the Rule serves no purpose. Rules that have no meaning should be abolished. So long as Rule 23(b)(1)(A) exists, plaintiffs will move for certification on (b)(1)(A) grounds, parties will waste time and money briefing (b)(1)(A) certification issues, courts will waste time thinking about (b)(1)(A) issues, and some courts will (mistakenly, we think) grant (b)(1)(A) certifications. Why permit this mischief?

Unless someone can identify an independent purpose served by Rule 23(b)(1)(A), we propose to abolish it.

(b)(1)(A) begone!

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