The efficiency of the US class action regime hinges upon a core procedural mechanism: the class representative. By permitting a large group of plaintiffs with typically modest claims to rely on a small subset of representatives (or, in some cases, a single representative), plaintiffs secure a means by which to seek recovery against a common defendant.
We explore below who may represent such a class including how the adequacy of such representatives is assessed and the procedure to select them. Of interest too is the role of counsel in class actions and the safeguards in place in the US to address particular ethical concerns in this area.
Once the class has been certified, all members are, in theory, potential class representatives. However, a class representative should be selected with care. What’s more, U.S. defendants are well-served to take an interest in the class representative as due process challenges can quickly change the course of a class action proceeding.
Several principles should remain at top of mind when evaluating the adequacy of class representation: (1) that the class representative and their counsel owe a fiduciary duty to absent class members, (2) that the sufficiency of due process depends upon proper and adequate class representation; and (3) that U.S. courts impose a separate, “typicality” requirement to demonstrate that class representatives claims are “typical” of the absent class members’ claims. The “typicality” requirement was designed to buttress the “adequacy” requirement—they are not synonymous and should be treated as separate inquiries.
Rule 23(a)(4) – the adequacy requirement
While there is no direct equivalent to Civil Procedure Rule 19.8 in the United States, FRCP 23(a)(4) provides the baseline rule for class representation.
FRCP 23(a)(4): the representative parties will fairly and adequately protect the interests of the class.
Rule 23(a)(4), also known as the “adequacy of representation requirement” provides that the class representatives must fairly and adequately protect and advance the legal rights of absent class members. It is this adequacy of representation which justifies the class action mechanism in the United States and deems the binding effect on all class members proper.
Courts assess adequacy of representation in two parts: First, the court must determine whether the representatives – and their counsel – have any conflicts of interest with the class members. Representatives’ interests must align with the interests of the class. Second, the court must find that the representative plaintiffs- alongside their counsel- understand that they are acting in a representative capacity and are committed to prosecuting the action fairly, vigorously, and competently on behalf of the class.
- Alignment of interests/absence of conflict
- Commitment to of vigorous and competent representation
While designed with the aim of protecting absent plaintiffs, corporate defendants should take great interest in Rule 23(a)(4). Defendants to a class action are well-served to object to any potential deficiencies in the adequacy of representation due to their strong interest in the entire class being bound to the class action’s result.
Quality over quantity: what deems representation adequate?
Common wisdom used to be that proportionality between the total number of class representatives and the total class membership was the correct test for “effective” class representation. However, for over the last half a century, U.S. courts have generally rejected the notion that numbers should dictate the adequacy of class representation, focusing instead on the quality of representation.
“Quality of representation” is a multifaceted concept requiring competent legal counsel and class representatives who share in the best interests of the class. A finding that the representative lacks sufficient interest in the outcome of the action will result in the dismissal of the representative. However, the size/value of the representatives’ personal claim, although a relevant consideration, is not dispositive of whether the class is adequately represented.
Who Can Serve as Class Representative? / Procedure to Select Class Rep
Predictably, US law requires that the class representative is a member of the class at issue. The courts however take differing approaches. Some hold that a representative who is not a member of the class could not possibly provide adequate representation. After reaching such a finding, these courts decline to take the analysis any further. Other courts apply a more thorough analysis and find that individuals cannot adequately represent the class if they are not “similarly situated” in comparison to the totality of the class and do not demand absolute uniformity between the representatives and the rest of the class to find adequate class representation: “The similarity between claims or defenses of the representatives does not have to be perfect.”
Plaintiffs carry the burden of demonstrating that the named representatives are members of the class and that the interests of absent class members will be protected but there is no requirement that the class representative receive the express blessing of each of the class members. Note that if there is more than one class representative, it is not necessary that all representatives meet the Rule 23(a)(4) standard. As long as one of the class representatives survives an analysis under Rule 23(a)(4), the adequacy of representation requirement has been met.
Duties beyond the Class Representative: Adequacy of Class Counsel
Adequacy of legal counsel is also of concern in the U.S. system. For example, some U.S. courts maintain that class counsel has an affirmative duty to monitor representation problems and report any such finding to the court.
Because of the unique structure of the class action system, class counsel functions as an additional class representative, and does not serve the “traditional” role of hired counsel seen in other litigation settings. This is due in no small part to the unique attorney-client relationship in a class action. Unlike in traditional U.S. attorney-client relationships, class members do not have an unencumbered right to “fire” class counsel. Further, members of the class cannot order counsel to accept or reject a settlement offer. Instead, it is the duty of counsel to determine whether the terms of the proposed settlement serve the best interests of the class overall and they must determine whether seeking the court’s approval of a settlement would be in the best interests of the class as a whole. Class counsel is also often the party to identify, gather, and solicit a class to enable their pursuit of a case.
Given the power bestowed upon class counsel – and that class counsel, not the class, often has a financial interest in the outcome, ethical concerns are pervasive in class action practice.
Rule 23 has therefore been developed by the courts to maintain and reinforce various safeguards to protect the interests of absent class members. Since 2003, rule 23 has required that class counsel be appointed by the court. When assessing appointment of counsel, courts consider the following factors: (1) “the work counsel has done in identifying or investigating potential claims in the action;” (2) “counsel’s experience in handling class actions, other complex litigation, and the types of claims asserted in the action;” (3) “counsel’s knowledge of the applicable law;” and (4) “the resources that counsel will commit to representing the class.” If the court finds that none of the applicants would be satisfactory as class counsel, the court may deny class certification and may recommend that counsel modify their application(s) or invite new applications.
This focus on the protection of absent class members can even extend to the presiding judge. Parties may challenge the propriety of a judge based on the judge’s own interest in the outcome of the case. An affirmative finding can lead to reassignment to a new judge. With that being said, there is some debate as to what constitutes an “interest in the outcome” of a class action. It has also been argued that judges are owed greater deference in determining “interest.”
Conclusion
Absent class members have minimal bearing on the actual proceedings and Defendants should and do focus their attention on the class representatives and class counsel as the adverse party to a class action. However, given the design of the U.S. class action regime, the concern for absent class members affects nearly all decisions when litigating a class action. Perhaps counter-intuitively, Defendants would also be wise to embrace this concern and share in protecting absent class members (even though they are, technically, the legal adversary) given the obvious global interest in upholding due process rights. Defendants have an interest in “buying in” to the system and ensuring that absent class members are protected since this ensures that the outcome of the class action will have a binding effect and prevent future litigation including due process challenges.
[View source.]
