Class Actions (Rule 23 and California)
Key Takeaways
- Every Rule 23 class must satisfy four prerequisites: numerosity, commonality, typicality, and adequacy of representation (Rule 23(a)).
- A (b)(1) class avoids inconsistent obligations or prejudice; a (b)(2) class seeks injunctive or declaratory relief; a (b)(3) damages class requires common questions to predominate and a class action to be superior.
- Only (b)(3) classes require individual notice and an opt-out right; (b)(1) and (b)(2) classes are mandatory with no opt-out.
- The Class Action Fairness Act (CAFA, 28 U.S.C. 1332(d)) grants federal jurisdiction over class actions with minimal diversity, 100+ class members, and more than $5 million aggregated in controversy.
- A class judgment binds all members; under Phillips Petroleum v. Shutts, absent plaintiffs in a (b)(3) damages class are bound only if given notice and an opportunity to opt out.
The Rule 23(a) Prerequisites
A class action lets a representative plaintiff sue on behalf of a large group of similarly situated absent members. Before certification, the court must find all four prerequisites of Rule 23(a) (mnemonic: CANT — Commonality, Adequacy, Numerosity, Typicality):
- Numerosity — the class is so numerous that joinder of all members is impracticable (no fixed number, but courts routinely find 40+ sufficient).
- Commonality — there are questions of law or fact common to the class. After Wal-Mart Stores v. Dukes, commonality requires a common contention capable of classwide resolution — one whose truth or falsity will resolve an issue 'in one stroke.'
- Typicality — the representative's claims or defenses are typical of the class.
- Adequacy of representation — the representative and class counsel will fairly and adequately protect the class (no conflicts of interest; competent counsel). This is constitutionally essential because the judgment binds absent members (due process).
The party seeking certification bears the burden, and the court conducts a 'rigorous analysis,' which may overlap with the merits.
The Three Types of Rule 23(b) Classes
After 23(a) is met, the class must also fit one of three categories in Rule 23(b) — this determines notice and opt-out rights:
| Type | When used | Notice / opt-out |
|---|---|---|
| 23(b)(1) | Separate actions would risk inconsistent obligations for the defendant (b)(1)(A) or impair absent members' interests, e.g., a limited fund (b)(1)(B) | Mandatory — no opt-out |
| 23(b)(2) | The defendant 'acted or refused to act on grounds generally applicable to the class,' so injunctive or declaratory relief is appropriate (classic civil-rights class) | Mandatory — no opt-out (monetary relief may not be more than incidental — Dukes) |
| 23(b)(3) | Common questions predominate over individual ones AND a class action is superior to other methods (the damages class) | Required individual notice + opt-out right |
Under 23(c)(2)(B), only (b)(3) classes require the 'best notice practicable,' including individual notice to identifiable members, and the right to opt out. The cost of notice generally falls on the representative plaintiff (Eisen v. Carlisle).
CAFA, Binding Effect, and California Class Procedure
Class Action Fairness Act (CAFA)
CAFA (28 U.S.C. 1332(d)) dramatically expanded federal jurisdiction over class actions. Federal courts have original (and thus removal) jurisdiction when:
- There are at least 100 class members,
- Minimal diversity exists (any one class member is diverse from any one defendant), AND
- The aggregated amount in controversy exceeds $5,000,000 (claims are aggregated across the class — a major exception to the no-aggregation rule).
CAFA also relaxes removal: the forum-defendant rule and the 1-year cap don't apply, and any defendant may remove without all defendants' consent. Courts must/may decline under 'home-state' and 'local-controversy' exceptions where most members and a key defendant are from the forum state.
Binding effect and due process
A class judgment binds all members, including absentees. Phillips Petroleum Co. v. Shutts holds that an absent (b)(3) plaintiff may be bound consistent with due process only if afforded notice, an opportunity to opt out, and adequate representation. A class member may later collaterally attack a judgment by showing representation was inadequate.
California class actions (CCP 382)
California authorizes class actions under CCP 382 ('when the question is one of a common or general interest, of many persons, or when the parties are numerous'). Courts borrow Rule 23-like factors — ascertainable class, community of interest (predominant common questions, typicality, adequacy) — and weigh whether class treatment yields substantial benefits. California is plaintiff-friendly in consumer and wage-and-hour cases and has distinct rules on opt-out and cy pres distribution of unclaimed funds.
Note: a class action filed in California state court satisfying CAFA's thresholds is freely removable to federal court.
Settlement, certification timing, and adequacy traps
A class action may be settled, dismissed, or compromised only with court approval (Rule 23(e)) after notice to the class and a fairness hearing; in (b)(3) classes the court may give members a second opportunity to opt out. The court must define the class and appoint class counsel at certification (Rule 23(c), (g)), and certification may be altered or amended before final judgment as the case develops. A defendant cannot 'pick off' a named plaintiff by tendering full relief on the individual claim to moot the class: an unaccepted Rule 68 offer of judgment does not moot the case (Campbell-Ewald Co. v. Gomez).
Frequently tested traps: (1) Only (b)(3) classes have opt-out and individual notice — students wrongly assume every class member can opt out. (2) Commonality after Dukes is demanding: a generalized policy of 'discretion' delegated to local managers is not a common question capable of one-stroke resolution. (3) Under CAFA, class claims are aggregated to reach the $5 million threshold — a sharp exception to the usual rule that multiple plaintiffs cannot aggregate.
(4) Adequacy is constitutional: a member bound by an inadequately represented class judgment may collaterally attack it, so a structural conflict between subgroups (e.g., present vs. future claimants) defeats certification (Amchem, Ortiz).
Plaintiffs seek to certify a class of employees seeking only a company-wide injunction to end a discriminatory policy, with no individualized damages. Which Rule 23(b) category fits, and do members get an opt-out?
A class action is filed in state court with 500 members, at least one of whom is diverse from the defendant, and the claims aggregate to $8 million. Can the defendant remove to federal court?