Discretion in class certification.

Author:Wolff, Tobias Barrington
Position:Introduction through II. An overview of Discretion Under Modern Rule 23 C. Redefinition of the Class, p. 1897-1926
 
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INTRODUCTION I. THE ABUSE OF DISCRETION STANDARD IN CLASS CERTIFICATION II. AN OVERVIEW OF DISCRETION UNDER MODERN RULE 23 A. The Period of Transition Following the 1966 Revisions and Experimentation in the Face of Uncertainty B. Management of Class Proceedings C. Redefinition of the Class D. Discretion Not to Certify III. ANALYZING THE ROLE OF DISCRETION IN CLASS ACTION LITIGATION A. The System of Discretion Surrounding Class Certification B. Discretion in Class Certification After Shady Grove CONCLUSION INTRODUCTION

A district court has broad discretion in deciding whether a suit may be maintained as a class action. Variations on this phrase populate the class action jurisprudence of the federal courts. The sentiment reflects the equity roots of the representative class proceeding--a history that has been thoroughly investigated by leading scholars in the field of civil procedure, (1) structured the work of the committee that drafted modern Rule 23, (2) and has repeatedly been embraced by the Supreme Court as a necessary starting point when interpreting and applying the Rule in modern practice. (3) The power of the federal courts to exercise discretion when deciding whether to permit a suit to proceed as a class action has long been treated as an elemental component of a representative proceeding. It is therefore cause for surprise that there is no broad consensus regarding the nature and definition of this judicial discretion in the certification process. The federal courts have not coalesced around a clear or thorough exposition of the question, and the scholarly literature has not provided a sustained analytical treatment.

Since the adoption of the 1966 amendments to Rule 23, lower federal courts have regularly exercised discretion in a range of modes when presented with requests for class certification. The management of class proceedings is perhaps the most widely acknowledged form of this discretion. The authority of district courts to make judgments about how to structure a complex proceeding--and to decide whether practical obstacles to the fair and accurate adjudication of claims on a class-wide basis make certification inappropriate--is a familiar one that enjoys an explicit textual foundation in Rule 23(b)(3) proceedings. (4) Similarly, district courts sometimes exercise discretion in defining the parameters of the class definition and deciding when subclasses are necessary, often acting independently of any proposals made by the parties. (5) And district courts--frequently acting with the imprimatur of the courts of appeals--have invoked a broad range of considerations to decide when class certification is desirable, appropriate, or consistent with the underlying substantive law that governs the disputes brought before them. In (b)(3) proceedings, these determinations are often explained as an application of the superiority requirement, and in (b)(2) actions they are sometimes described in terms of the prerequisites for injunctive relief. However, lower courts have also found these forms of discretion to be inherent in Rule 23, requiring judges to consider the impact of substantive law on the certification question without regard to any specific textual mandate. (6)

Three propositions have infused this practice of discretionary class certification. The first is an understanding among judges that the modern class action entails an element of public trust. When a plaintiff comes into court asking to prosecute the claims of numerous people she has never met, she is not asserting a purely personal prerogative. Rather, the plaintiff is requesting that the court employ its authority to initiate a type of proceeding that must be justified with reference to broader public values: the procedural and systemic values embodied in Rule 23 itself, and the policies of the underlying law governing the dispute. Second, class actions entail substantial uncertainty. The question whether claims can be faithfully adjudicated and successfully managed on a classwide basis is often difficult to predict at the inception of a proceeding. And third, this combination of broad public interests and factual indeterminacy sometimes calls for experimentation as courts test the capacity of the class action to facilitate the "just, speedy, and inexpensive" resolution of mass claims. (7)

Because of these realities, discretion in class certification--in particular, the discretion not to certify a class even though the threshold requirements of the Rule appear to be satisfied--serves a vital systemic role. Discretion is a safety valve. It enables district judges to avoid issuing certification orders that would undermine substantive policies or set in motion unnecessary and counterproductive remedies. In the absence of this tool, lower federal courts are left only with a blunt instrument to avoid adverse results in difficult cases: categorical limitations on the threshold conditions of certification, which threaten to constrain class litigation in all types of disputes. At the same time, the discretionary power to decline certification raises legitimate questions about fairness, consistency of application, and the danger that courts will make inappropriate legislative judgments. The courts of appeals have addressed these concerns in a range of cases over the last five decades, and more attention to the limits of these discretionary powers is needed.

The recent decision of the Supreme Court in Shady Grove Orthopedic Associates v. Allstate Insurance Co. (8) makes the need for a systematic examination of these matters more salient. In one of the few passages that garnered a majority of an otherwise fractured opinion, the Court used language that could be read to deprive district courts of any discretion when deciding whether certification is appropriate in a given case (9)--a holding that would upend forty-five years of practice under modern Rule 23. Using language to describe Rule 23(b) that I have found in no other reported decision, the majority explained that "[t]he discretion suggested by Rule 23's 'may' is discretion residing in the plaintiff [and not the district court]: He may bring his claim in a class action if he wishes." (10) The Court did not indicate that it was effecting any radical change, nor did it acknowledge any need to harmonize its assertion with the decades of federal judicial holdings recognizing the discretion of district courts in matters related to certification, including multiple statements by the Court itself. (11) Rather, the majority spoke in a register that suggested it did not believe it was saying anything surprising.

To paraphrase Professor David Shapiro, in a society where revolution is not the order of the day, it would disserve the drafters of the Federal Rules to impute a revolutionary purpose to unremarkable language. (12) A ruling that lower federal courts lack discretion in deciding whether a suit should be certified for class treatment would be revolutionary, and a careful examination of the majority's discussion of Rule 23 in Shady Grove makes clear that the ruling calls for no such revolution.

This Article undertakes three tasks. Part I examines the abuse of discretion standard in class certification and its place in broader academic and judicial discussions about the nature of procedural discretion. Part II then sets forth a descriptive account of the discretion that federal courts have understood themselves to possess in class certification proceedings under modern Rule 23, and it attempts to develop a useful taxonomy in describing the different modes in which that discretion has operated. My focus is legal doctrine as manifested in reported judicial decisions, an incomplete source for discerning the actual practice of trial courts, but still indispensable in assessing the parameters within which that practice has unfolded. This overview is the product of close analysis of approximately one hundred class action rulings that discuss the nature of discretion in class certification, drawn, in turn, from the review of a larger universe of cases assembled with the help of an invaluable research assistant. I make no claim that the results are comprehensive, but I believe that they make possible a representative account of the range and types of discretion that lower federal courts have understood themselves to possess when considering certification requests.

With this body of material set forth for discussion, Part III provides an argument about the systemic function of discretion in class certification and the institutional implications of different species of discretion in the certification process. Part III also reexamines the Shady Grove decision in light of the preceding discussion, asking how much past practice in class adjudication the ruling unsettles. The answer to that question is: not much. Shady Grove can be harmonized with the large body of discretionary practice undertaken by lower federal courts in class certification proceedings, and there is reason to hope that this harmonization will prompt more active attention to the nature and boundaries of lower court discretion in class action litigation going forward.

  1. THE ABUSE OF DISCRETION STANDARD IN CLASS CERTIFICATION

    The classic discussion of procedural discretion and appellate review in the academic literature comes from Judge Henry Friendly's canonical lecture Indiscretion About Discretion. (13) Throughout that essay, Judge Friendly emphasizes the need to distinguish between respective areas of competence and systemic concerns when defining the relationship between trial courts and appellate courts in discretionary matters. (14) Determinations that benefit from "the trial court's superior opportunities to reach a correct result" through direct contact with parties, witnesses, and events are more appropriate recipients of wide discretionary berth, as are those situations that require a balancing of factors "so...

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