Opinion ID: 836210
Heading Depth: 3
Heading Rank: 1

Heading: what is the proper analysis for determining whether class certification is justified?

Text: Pursuant to MCR 3.501(A)(1), members of a class may only sue or be sued as a representative party of all class members if the prerequisites dictated by the court rule are met. Therefore, in order to proceed with a suit in the form of a class action, the following circumstances must exist: (a) the class is so numerous that joinder of all members is impracticable; (b) there are questions of law or fact common to the members of the class that predominate over questions affecting only individual members; (c) the claims or defenses of the representative parties are typical of the claims or defenses of the class; (d) the representative parties will fairly and adequately assert and protect the interests of the class; and (e) the maintenance of the action as a class action will be superior to other available methods of adjudication in promoting the convenient administration of justice. [MCR 3.501(A)(1).] Next, MCR 3.501(A)(2) sets forth the following non-exhaustive list of factors that a court should consider when determining whether maintaining a suit as a class action is the superior method of adjudication: (a) whether the prosecution of separate actions by or against individual members of the class would create a risk of (i) inconsistent or varying adjudications with respect to individual members of the class that would confront the party opposing the class with incompatible standards of conduct; or (ii) adjudications with respect to individual members of the class that would as a practical matter be dispositive of the interests of other members not parties to the adjudications or substantially impair or impede their ability to protect their interests; (b) whether final equitable or declaratory relief might be appropriate with respect to the class; (c) whether the action will be manageable as a class action; (d) whether in view of the complexity of the issues or the expense of litigation the separate claims of individual class members are insufficient in amount to support separate actions; (e) whether it is probable that the amount which may be recovered by individual class members will be large enough in relation to the expense and effort of administering the action to justify a class action; and (f) whether members of the class have a significant interest in controlling the prosecution or defense of separate actions. [MCR 3.501(A)(2).] It is important to note that the rules governing class certification in MCR 3.501(A) very closely mirror the federal prerequisites for class certification found in F.R. Civ. P. 23. In Falcon, the United States Supreme Court reiterated that the class action device for litigation is `an exception to the usual rule that litigation is conducted by and on behalf of the individual named parties only.' [19] The Supreme Court concluded that district courts must conduct a rigorous analysis of each of the class action prerequisites in F.R. Civ. P. 23 before certifying a class. [20] Dow argues that the federal rigorous analysis requirement should apply to state class actions as well. [21] Dow asserts that representative plaintiffs will always allege that their proposed class complies with the prerequisites for class certification, and a trial court should not simply rely on these allegations when deciding whether to certify a class. While Dow concedes that a court may not deny class certification on the ground that plaintiffs are unlikely to prevail on the merits of their underlying claims, Dow argues that this prohibition alone does not relieve plaintiffs of their burden to establish that the prerequisites of class certification have in fact been met. Conversely, plaintiffs argue that only MCR 3.501(A) governs class certification in Michigan, and that this court rule does not mandate a rigorous analysis. Additionally, plaintiffs point out that no decision by this Court, or any published opinion by the Court of Appeals, has held that the federal rigorous analysis requirement applies to state class actions. Given that Michigan's requirements for class certification are nearly identical to the federal requirements, we find it reasonable to conclude that similar purposes, goals, and cautions are applicable to both. [22] While it is true that Michigan courts are not bound by any decision requiring a rigorous analysis, we question whether the purpose of the strictly articulated class certification prerequisites would be defeated if a representative plaintiff's only burden is to simply state that its proposed class does in fact meet the prerequisites. Dow argues that this type of lax burden would give courts the authority to rubber stamp a plaintiff's allegations that the prerequisites in MCR 3.501(A)(1) have been met. To avoid this danger, Dow urges this Court to clarify that the federal rigorous analysis standard applies for state class actions. However, Dow's argument seems to implicate only two options: either Michigan courts must conduct a rigorous analysis for class certification decisions, or Michigan courts may simply accept a plaintiff's bare assertions that the prerequisites for class certification are in fact met. We believe that Dow's argument is unnecessarily narrow in scope. The plain language of MCR 3.501(A)(1) states that representative plaintiffs may pursue a class action suit only if the enumerated prerequisites are met. Thus, it is apparent that strict adherence to the class certification requirements is required. There is nothing ambiguous about this court rule. A party seeking class certification must meet the burden of establishing each prerequisite before a suit may proceed as a class action. Furthermore, there is no authority in Michigan allowing a party seeking class certification to avoid this affirmative burden. The next logical inquiry is what a party must show in order to satisfy a court that the prerequisites for class certification are established. More specifically, how must a court analyze a party's motion for class certification to determine whether sufficient information exists to justify certification? Given that MCR 3.501(A)(1) contains carefully crafted prerequisites for class certification, common sense dictates that at least some greater analysis is required than simply accepting a party's bare assertion that the prerequisites have been met. The United States Supreme Court has labeled this greater analysis as a rigorous one in Falcon. [23] The problem is that Falcon provides little guidance as to what a rigorous analysis actually entails. Furthermore, Falcon is so factually distinct from the present case that we are unable to draw significant parallel conclusions. [24] What we can infer from the Falcon decision is that a court must only certify a class in circumstances where the court has actually been shown that the prerequisites for class certification are satisfied. Before Falcon, the United States Supreme Court held that trial courts should not conduct a preliminary inquiry into the merits of claims when making a class certification determination. [25] In Falcon, the Supreme Court reasoned that because the decision to certify a class involves considerations `enmeshed in the factual and legal issues comprising the plaintiffs cause of action,' a court may at times need to look further than the pleadings to make a determination on class certification. [26] The Supreme Court added that, sometimes, the question of certification will be plainly and adequately answered by the pleadings. [27] After Falcon, the Supreme Court clarified that a trial court has broad discretion when determining whether a class should be certified; however, its discretion must be exercised within the framework of F.R. Civ. P. 23. [28] Now, federal courts must balance both the prohibition against delving into the merits of claims during the class certification determination with the requirement that courts conduct a rigorous analysis to determine whether the class certification prerequisites are satisfied. The Sixth Circuit recognizes that district courts must conduct a rigorous analysis to determine whether the prerequisites in F.R. Civ. P. 23 are met. [29] In addition, the United States Court of Appeals for the Sixth Circuit has acknowledged that it is possible to determine that the requirements for class certification are met solely on the basis of the pleadings. [30] Nevertheless, this determination often requires more information than the pleadings provide. [31] We agree with Dow that a certifying court may not simply rubber stamp a party's allegations that the class certification prerequisites are met. [32] However, the federal rigorous analysis requirement does not necessarily bind state courts. [33] We believe that the plain language of MCR 3.501(A) provides sufficient guidance for class certification decisions in Michigan. Given that MCR 3.501(A)(1) expressly conditions a class action on satisfaction of the prerequisites, a party seeking class certification is required to provide the certifying court with information sufficient to establish that each prerequisite for class certification in MCR 3.501(A)(1) is in fact satisfied. A court may base its decision on the pleadings alone only if the pleadings set forth sufficient information to satisfy the court that each prerequisite is in fact met. [34] The averments in the pleadings of a party seeking class certification are only sufficient to certify a class if they satisfy the burden on the party seeking certification to prove that the prerequisites are met, such as in cases where the facts necessary to support this finding are uncontested or admitted by the opposing party. If the pleadings are not sufficient, the court must look to additional information beyond the pleadings to determine whether class certification is proper. [35] However, when considering the information provided to support class certification, courts must not abandon the well-accepted prohibition against assessing the merits of a party's underlying claims at this early stage in the proceedings. [36] Similar to the federal district courts, state courts also have broad discretion to determine whether a class will be certified. [37] Certifying courts must be mindful that, when it is necessary to look beyond a party's assertions to determine whether class certification is proper, the courts shall analyze any asserted facts, claims, defenses, and relevant law without questioning the actual merits of the case. [38] We believe the above analysis strikes the appropriate balance between the need to ensure that the class certification prerequisites are sufficiently satisfied and the need to preserve a trial court's discretion in making class certification decisions.