Opinion ID: 493388
Heading Depth: 1
Heading Rank: 3

Heading: adequate class representation

Text: 24 Having concluded that the district court's ruling on the requirements of Rule 23(b)(3) constituted an abuse of the court's discretion, we must address the court's alternative holding that the named plaintiffs in each of these cases did not satisfy the adequate representation requirement of Rule 23(a)(4) because they failed to demonstrate sufficient vigor to prosecute a class suit. 25 Among the prerequisites to the maintenance of a class action is the requirement of Rule 23(a)(4) that the class representatives will fairly and adequately protect the interests of the class. The purpose of this requirement, as of many other of Rule 23's procedural mandates, is to protect the legal rights of absent class members. Because all members of the class are bound by the res judicata effect of the judgment, a principal factor in determining the appropriateness of class certification is the forthrightness and vigor with which the representative party can be expected to assert and defend the interests of the members of the class. Mersay v. First Republic Corp., 43 F.R.D. 465, 470 (S.D.N.Y.1968); see also Shatzman v. Talley, 91 F.R.D. 270, 273 (N.D.Ga.1981) (insufficiency of funds to prosecute suit indicates the vigor with which the case will be pursued); Dolgow v. Anderson, 43 F.R.D. 472, 494 (E.D.N.Y.1968) (court must be assured that 'the representatives [will] put up a real fight'  (quoting J. Chafee, Some Problems in Equity 231 (1950)), rev'd on other grounds, 438 F.2d 825 (2d Cir.1971); cf. Falcon, 457 U.S. at 161, 102 S.Ct. at 2372. 26 The inquiry into whether named plaintiffs will represent the potential class with sufficient vigor to satisfy the adequacy requirement of Rule 23(a)(4) most often has been described to involve[ ] questions of whether plaintiffs' counsel are qualified, experienced, and generally able to conduct the proposed litigation and of whether plaintiffs have interests antagonistic to those of the rest of the class. Griffin v. Carlin, 755 F.2d 1516, 1532 (11th Cir.1985). Even where these two requirements are satisfied, however, named plaintiffs might not qualify as adequate class representatives because they do not possess the personal characteristics and integrity necessary to fulfill the fiduciary role of class representative. See, e.g., Kline v. Wolf, 702 F.2d 400, 402-03 (2d Cir.1983); Armour v. City of Anniston, 89 F.R.D. 331, 332 (D.C.Ala.1980), aff'd, 654 F.2d 382 (5th Cir. Unit B Aug. 1981); 7A C. Wright, A. Miller and M. Kane, Federal Practice and Procedure, Civil 2d Sec. 1766 at pp. 308-10. 27 For similar reasons, some courts have found, as did the district court here, that Rule 23(a)(4) was not satisfied where the named plaintiffs demonstrated insufficient participation in and awareness of the litigation. See, e.g. Darvin v. International Harvester Co., 610 F.Supp. 255, 257 (S.D.N.Y.1985); Massengill v. Board of Educ., 88 F.R.D. 181 (N.D.Ill.1980). In following the lead of these cases, however, the district court appears to have applied a standard that does not vindicate the policies and purposes of Rule 23. Contrary to the district court's approach to the issue, adequate class representation generally does not require that the named plaintiffs demonstrate to any particular degree that individually they will pursue with vigor the legal claims of the class. Although the interests of the plaintiff class certainly would be better served if the named plaintiffs fully participate in the litigation, see, e.g., In re Goldchip Funding Co., 61 F.R.D. 592, 594-95 (M.D.Pa.1974), the economics of the class action suit often are such that counsel have a greater financial incentive for obtaining a successful resolution of a class suit than do the individual class members. See Deposit Guaranty Nat. Bank v. Roper, 445 U.S. 326, 338-39, 100 S.Ct. 1166, 1174, 63 L.Ed.2d 427 (1980) (plurality opinion). It is not surprising, then, that the subjective desire to vigorously prosecute a class action, which the district court here found missing in the named plaintiffs, quite often is supplied more by counsel than by the class members themselves. Obviously this creates a potential for abuse. See id. at 339, 100 S.Ct. at 1174. Yet the financial incentives offered by the class suit serve both the public interests in the private enforcement of various regulatory schemes, particularly those governing the securities markets, and the private interests of the class members in obtaining redress of legal grievances that might not feasibly be remedied within the framework of a multiplicity of small individual suits for damages. Id. 28 As the district court aptly noted, a potential class is entitled to more than blind reliance upon even competent counsel by uninterested and inexperienced representatives. In re Goldchip Funding Co., 61 F.R.D. at 594. For where the named plaintiffs have abdicated their role in the case beyond that of furnishing their names as plaintiffs, the attorneys, in essence, are the class representative. Helfand v. Cenco, 80 F.R.D. 1, 7-8 (N.D.Ill.1977). Several district courts thus have properly denied class certification where the class representatives had so little knowledge of and involvement in the class action that they would be unable or unwilling to protect the interests of the class against the possibly competing interests of the attorneys. See, e.g., Efros v. Nationwide Corp., 98 F.R.D. 703, 707 (S.D.Ohio 1983); Helfand v. Cenco, supra; see also 7A Wright, Miller & Kane at Sec. 1766 pp. 310-11 (the inquiry into the knowledge of the representative is to ensure that the party is not simply lending his name to a suit controlled entirely by the class attorney.). 29 In concluding that the named plaintiffs in these cases do not satisfy the adequate representation requirement of Rule 23(a)(4), the district court noted that neither this court nor the Supreme Court has set forth standards for determining the adequacy of class representatives. 7 Because the issue of adequate class representation arises in a wide variety of contexts, it would be inappropriate for us to establish a standard for general application. We conclude, however, that in securities cases such as these, where the class is represented by competent and zealous counsel, class certification should not be denied simply because of a perceived lack of subjective interest on the part of the named plaintiffs unless their participation is so minimal that they virtually have abdicated to their attorneys the conduct of the case. To require less would permit attorneys essentially to serve as class representatives; to require more could well prevent the vindication of the legal rights of the absent class members under the guise of protecting those rights. 30 Although we conclude that the district court applied an erroneous standard in determining that the named plaintiffs would not be adequate class representatives, it would be inappropriate for us to make an independent application of the correct standard in this case. In contrast to the more strictly legal questions presented by the district court's characterization of the plaintiffs' claims in its rulings on the Rule 23(b)(3), the adequacy of class representation is primarily a factual issue that is best left for determination by the district court. Consequently, we remand the Rule 23(a)(4) issue for the district court to apply the standard we have set forth above.