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Woops meant to post this info from wiki, fun read on class actions

In the United States federal courts, class actions are governed by Federal Rules of Civil Procedure Rule 23 and 28 U.S.C.A. § 1332 (d).

Class action lawsuits may be brought in federal court if the claim arises under federal law, or if the claim falls under 28 USCA § 1332 (d). Under § 1332 (d) (2) the federal district courts have original jurisdiction over any civil action where the amount in controversy exceeds $5,000,000 and either 1. any member of a class of plaintiffs is a citizen of a State different from any defendant; 2. any member of a class of plaintiffs is a foreign state or a citizen or subject of a foreign state and any defendant is a citizen of a State; or 3. any member of a class of plaintiffs is a citizen of a State and any defendant is a foreign state or a citizen or subject of a foreign state.[1] Nationwide plaintiff classes are possible, but such suits must have a commonality of issues across state lines. This may be difficult if the civil law in the various states lack significant commonalities. Large class actions brought in federal court frequently are consolidated for pre-trial purposes through the device of multidistrict litigation (MDL).[citation needed] It is also possible to bring class action lawsuits under state law, and in some cases the court may extend its jurisdiction to all the members of the class, including out of state (or even internationally) as the key element is the jurisdiction that the court has over the defendant.

Typically, federal courts are thought to be more favorable for defendants, and state courts more favorable for plaintiffs. Many class action cases are filed initially in state court. The defendant will frequently try to remove the case to federal court. The Class Action Fairness Act of 2005[2] increases defendants' ability to remove state cases to federal court by giving federal courts original jurisdiction for all class actions with damages exceeding $5,000,000, exclusive of interest and costs.[3] It should be noted, however, that the Class Action Fairness Act contains carve-outs for, 'inter alia', shareholder class action lawsuits covered by the Private Securities Litigation Reform Act of 1995 and those concerning internal corporate governance issues (the latter typically being brought as shareholder derivative actions in the state courts of Delaware, the state of incorporation of most large corporations).[4]

The procedure for filing a class action is to file suit with one or several named plaintiffs on behalf of a proposed class. The proposed class must consist of a group of individuals or business entities that have suffered a common injury or injuries. Typically these cases result from an action on the part of a business or a particular product defect or policy that applied to all proposed class members in a typical manner. After the complaint is filed, the plaintiff must file a motion to have the class certified. In some cases class certification may require discovery in order to determine its size and if the proposed class meets the standard for class certification.

Upon the motion to certify the class, the defendants may object to whether the issues are appropriately handled as a class action, to whether the named plaintiffs are sufficiently representative of the class, and to their relationship with the law firm or firms handling the case. The court will also examine the ability of the firm to prosecute the claim for the plaintiffs, and their resources for dealing with class actions.

Due process requires in most cases that notice describing the class action be sent, published, or broadcast to class members. As part of this notice procedure, there may have to be several notices, first a notice giving class members the opportunity to opt out of the class, i.e. if individuals wish to proceed with their own litigation they are entitled to do so, only to the extent that they give timely notice to the class counsel or the court that they are opting out. Second, if there is a settlement proposal, the court will usually direct the class counsel to send a settlement notice to all the members of the certified class, informing them of the details of the proposed settlement.

In federal civil procedure law, which has also been accepted by approximately 35 states (through adoption of state civil procedure rules similar to the federal rules), the class action must have certain definite characteristics: (1) the class must be so large as to make individual suits impractical, (2) there must be legal or factual claims in common (3) the claims or defenses must be typical of the plaintiffs or defendants, and (4) the representative parties must adequately protect the interests of the class. These four requirements are often summarized as numerosity, commonality, typicality, and adequacy. In many cases, the party seeking certification must also show (5) that common issues between the class and the defendants will predominate the proceedings, as opposed to individual fact-specific conflicts between class members and the defendants and (6) that the class action, instead of individual litigation, is a superior vehicle for resolution of the disputes at hand.

[edit] State class actionsSince 1938, many states have adopted rules similar to the FRCP. However, some states like California have civil procedure systems which deviate significantly from the federal rules; the California Codes provide for four separate types of class actions. As a result, there are two separate treatises devoted solely to the complex topic of California class actions.[5] Some states, such as Virginia, do not provide for any class actions, while others, such as New York, limit the types of claims that may be brought as class actions.

[edit] HistoryThe ancestor of the class action was what modern observers call "group litigation," which appears to have been quite common in medieval England from about 1200 onward.[6] These lawsuits involved groups of people either suing or being sued in actions at common law. These groups were usually based on existing societal structures like villages, towns, parishes, and guilds. What is striking about these early cases is that unlike modern courts, the medieval English courts never questioned the right of the actual plaintiffs to sue on behalf of a group or a few representatives to defend an entire group.[7]

As UCLA law professor Stephen Yeazell has pointed out, the most likely reason is that the abysmally poor transportation, communications, and administrative apparatus of medieval times made it impossible for the English sovereign to directly manage the entire country in terms of individuals; it was easier to structure society by imposing obligations upon groups which were enforced by the sporadic use of force.[8] In turn, lawyers and judges who operated the king's system of justice in a society strictly organized into groups would not question the right of a group to sue or be sued because to do so would bring into question the entire group-oriented society in which they operated.[8]

From 1400 to 1700, group litigation gradually switched from being the norm in England to the exception.[9] The development of the concept of the corporation led to the wealthy supporters of the corporate form becoming suspicious of all unincorporated legal entities, which in turn led to the modern concept of the unincorporated or voluntary association.[10] The tumultuous history of the Wars of the Roses and then the Star Chamber resulted in periods during which the common law courts were frequently paralyzed, and out of the confusion the Court of Chancery emerged with exclusive jurisdiction over group litigation.[11]

Chancery cases on group litigation after 1700 were a totally incoherent mess, which Yeazell has explained by pointing to the trends towards fragmentation and individualism in English society during that period; the resulting societal pressures ultimately led to the Reform Act 1832.[12] The problem which confounded Chancery was the shift from representation based on the consent of a group to representation based on a common interest, such as holding shares of a corporation.[13] Group litigation has struggled with the tension between consent and interest ever since.

By 1850, Parliament had enacted several statutes on a case-by-case basis to deal with issues regularly faced by certain types of organizations, like joint-stock companies, and with the impetus for most types of group litigation removed, it went into a steep decline in English jurisprudence from which it never recovered.[14] It was further weakened by the fact that equity pleading in general was falling into disfavor, which culminated in the Judicature Acts of 1874 and 1875.[14] Group litigation was essentially dead in England after 1850.

Group litigation survived in the United States only thanks to the influence of Supreme Court Associate Justice Joseph Story, who imported it in a rather mangled form into U.S. law through summary discussions in his two equity treatises as well as his famous opinion in West v. Randall (1820). Although Story was highly intelligent and familiar with all the relevant English precedents, he merely summarized them in a confused fashion because he "could not conceive of a modern function or a coherent theory for representative litigation: why?"[15] Like most Americans then and since, Story took individualism for granted; on that basis, he simply could not comprehend a rule that allowed a court to bind someone who had never been a party to litigation purportedly conducted on his behalf.[16]

The oldest predecessor to the class action rule was Equity Rule 48, promulgated in 1833, which allowed for representative suits in situations where there were too many individual parties (which now forms the first requirement for class action litigation, numerosity).[17] However, this rule did not allow such suits to bind similarly situated absent parties, which rendered the rule almost entirely useless and was a direct reflection of Story's inability to understand the old English Chancery precedents.[18] Story's confusion was apparently typical of 19th century American lawyers, as even the legendary Christopher Columbus Langdell also could not understand the old cases.[16]

Within ten years, the Supreme Court interpreted Rule 48 in such a way so that it could apply to absent parties under certain circumstances, but only by ignoring the plain meaning of the rule.[19] In the early 20th century, Equity Rule 48 was replaced with Equity Rule 38 as part of a major restructuring of the Equity Rules, and when federal courts merged their legal and equitable procedural systems in 1938, Equity Rule 38 became Rule 23 of the Federal Rules of Civil Procedure.

A major revision of the FRCP in 1966 radically transformed Rule 23, made the opt-out class action the standard option, and gave birth to the modern class action. Entire treatises have been written since to summarize the huge mass of law that sprung up from the 1966 revision of Rule 23.[20] Just as medieval group litigation bound all members of the group regardless of whether they all actually appeared in court, the modern class action binds all members of the class, with the exception of those who appear and object.

The Advisory Committee that drafted the new Rule 23 in the mid-1960s was influenced by two major developments. First was the suggestion of Harry Kalven, Jr. and Maurice Rosenfeld in 1941 that class action litigation by individual shareholders on behalf of all shareholders of a company could effectively supplement direct government regulation of securities markets and other similar markets.[21] The second development was the rise of the African-American civil rights movement, environmentalism, and consumerism.[22] As expected, the groups behind these movements, as well as many others in the 1960s, 1970s, and 1980s all turned to class actions as a means for achieving their goals. For example, a 1978 environmental law treatise reprinted the entire text of Rule 23 and mentioned "class actions" 14 times in its index.[23]

Of course, businesses targeted by class actions for inflicting massive aggregate harm have sought ways to avoid class actions altogether. In the 1990s, the U.S. Supreme Court issued a number of decisions which strengthened the "federal policy favoring arbitration".[24] In response, lawyers have added provisions to consumer contracts of adhesion called "collective action waivers". In 1999 the National Arbitration Forum began advocating that such contracts should be drafted so as to force consumers to waive the right to a class action completely, and such provisions have become very popular among businesses.[24] As of November 2007, the legal validity of contracts of adhesion with class action waivers is unclear, and courts have rendered mixed and sometimes contradictory opinions.[25]