Chapter § 5.03 Satisfying the Alternative Requirements of Rule 23(b)

• Jurisdiction: United States
• Publication year: 2020

§ 5.03 Satisfying the Alternative Requirements of Rule 23(b)

A class action must be maintainable under one of three alternatives under Rule 23(b)(1), (2) or (3) in addition to satisfying the Rule 23(a) requirements.⁴⁸ Rule 23(b)(1) and Rule 23(b)(2) authorize “mandatory” class actions under which potential class members don’t have an automatic right to notice or a right to opt out of the class.⁴⁹ On the other hand, Rule 23(b)(3), designed to accommodate claims for money damages,⁵⁰ requires notice to the class members, including the member’s right to opt out of the class, and specifies the factors that a court must consider in determining whether common issues predominate.⁵¹ We discuss each alternative below.

[1] Inconsistent, Varying, and Dispositive Adjudications

Rules 23(b)(1)(A) and (b)(1)(B) authorize class certification when, respectively, separate actions by or against individual class members would create a risk of “incompatible standards of conduct” for the defendant⁵² or, as a practical matter, “be dispositive of the interests” of nonparty class members or “substantially impair or impede their ability to protect their interests.”⁵³ So subsection (b)(1)(A) concerns the rights of the defendant, while subsection (b)(1)(B) concerns the rights of unnamed class members.⁵⁴

Rule 23’s advisory committee’s note provides guidance on both subsections of Rule 23(b)(1). Regarding subsection (b)(1)(A), the notes explain that class treatment is particularly useful when a party seeks injunctive relief “such that a large number of persons are in a position to call on a single person to alter the status quo, or to complain if it is altered, and the possibility exists that the actor might be called upon to act in inconsistent ways.”⁵⁵ For example, “actions by individuals against a municipality to declare a bond issue invalid or condition or limit it” or “individual litigations of the rights and duties of riparian owners, or of landowners’ rights and duties respecting a claimed nuisance” may both create a possibility of incompatible adjudications.⁵⁶ Some courts have held that subsection (b)(1)(A) does not apply to classes seeking monetary relief.⁵⁷

A class is properly certified under subsection (b)(1)(B) only if “the shared character of rights claimed or relief awarded entails that any individual adjudication by a class member disposes of, or substantially affects, the interests of absent class members.”⁵⁸ Examples include “when claims are made by numerous persons against a fund insufficient to satisfy all claims,”⁵⁹ “lawsuits by shareholders to declare a dividend, claimants seeking finite trust assets, or beneficiaries suing a retirement plan administrator.”⁶⁰

[2] Classwide Injunctive or Declaratory Relief

Rule 23(b)(2) authorizes class treatment 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.”⁶¹ The Supreme Court clarified in Dukes that the “key to the (b)(2) class is ‘the indivisible nature of the injunctive or declaratory remedy warranted—the notion that the conduct is such that it can be enjoined or declared unlawful only as to all of the class members or as to none of them.’ ”⁶² Thus, Rule 23(b)(2) applies only when a single injunction or declaration would provide relief to...