Making the Class Determination in Rule 23(b)(3) Class Actions
Fordham L. Rev.
Making the Class Determination in Rule 23(b)(3) Class Actions
John J. Madden 0
Denise G. Paully 0
Recommended Citation
0 John J. Madden and Denise G. Paully, Making the Class Determination in Rule 23(b)(3) Class Actions , 42
MAKING THE CLASS DETERMINATION IN
RULE 23(b) (3) CLASS ACTIONS
I.
INTRODUCON
The 1966 amendment1 of the original rule 232 was designed to substitute a
more functional approach to class action for the abstract conceptualism of the
old rule, 3 which gave the court no adequate guide in deciding which of the three
types of class actions-true, hybrid or spurious-applied in a given case.4 Not
designed to set precise guidelines for the handling of a class action,5 it was the
new rule's flexibility which was to be the critical factor in achieving the
practical effects sought; its success, therefore, depended to a large extent on how the
district courts dealt with this flexibility.6
One of the major purposes of the class suit device, the achievement of
judicial efficiency through the reduction of separate units of litigation, 7 was of
particular import to actions instituted under subdivision (b) (3). Such actions were
designed to ensure economies of time, effort and expense.8 The class action
brought under this subdivision was premised upon a commonality of legal or
factual questions among the class members; 9 the question of binding effect of
the judgment, which had been left open under the original rule, was answered
by providing that the judgment bound those persons who fit within the court's
definition of the class. 10 Under the old rule's spurious class action, absentees
were required to "opt-in" to the class to avail themselves of the judgment. This
"permissive joinder" provision was dealt with in the amendment by providing
that all class members would be bound unless they took affirmative steps to
exclude themselves--"opt-outC--from the class.1
the Small Claimant, 10 B.C. Ind. & Com. L. Rev. 501, 514 (1969) [hereinafter cited as
Ford]. Although concern was expressed concerning the potential abuse of such a flexible
procedure (see Amendments to Rules of Civil Procedure for the United States District
Courts, 383 U.S. 1029, 1035 (Black, J., dissenting); cf. Committee on Federal Rules of
Civil Procedure, Judicial Conference-Ninth Circuit, Supplemental Report, 37 F.R.D. 71,
80-82 (1965)), fears of such abuse of discretion have proved ill-founded. Miller, Problems
of Giving Notice in Class Actions, 58 F.R.D. 313, 334 (1973).
7. See Advisory Committee Notes 102-04; 3B J. Moore, Federal Practice fl23.02[1], at 71
(1974) ; Frankel 46; Handler, The Shift from Substantive to Procedural Innovations In Anti.
trust Suits-The Twenty-Third Annual Antitrust Review, 71 Colum. L. Rev. 1, 10 (1971)
[hereinafter cited as Handler]; Kaplan 388-91; Newberg 578; Wright, Class Actions, 47
F.R.D. 169, 170 (1970). The risk to parties of inconsistent determinations by different courts
also was sought to be eliminated. Advisory Committee Notes 102-03; Ford 504.
8. Advisory Committee Notes 102-03.
9. See Wright Speech, supra note 3, at 564.
10. Advisory Committee Notes 99. See 3B J. Moore, Federal Practice 9 23.02[1], at
125-26 (1974); Frankel 43; Wright, Class Actions, 47 F.R.D. 169, 181 (1970). Absent
members have standing to attack the judgment purporting to bind them in a later suit, and It is
the latter court which determines the res judicata effect of the judgment. Advisory
Committee Notes 105-06. See Note, Proposed Rule 23: Class Actions Reclassified, 51 Va. L.
Rev. 629, 658 (1965); cf. Note, Collateral Attack on the Binding Effect of Class Action
Judgments, 87 Harv. L. Rev. 589 (1974).
11. One of the abuses which the amended rule sought to correct was the "one-way
Intervention" sometimes permitted under the old rule, whereby absent class members, who
previously had not opted-in, were in some instances permitted to intervene after a
judgment favorable to the class. By removing the necessity of a class member's intervention,
the amended rule eliminated this problem. Advisory Committee Notes 105-06; see
Newberg 578. However, the provision that all absentees were deemed members of the class
unless they exercised their option to exclude themselves was one of the most criticized
features of the rule prior to its adoption. See Committee on Federal Rules of Civil Procedure,
Judicial Conference, Ninth Circuit-Supplemental Report, 37 F.R.D. 71, 76-77 (1965); part
IV infra. As a practical matter, on the average less than one percent of those sent notice
opt-out, Pomerantz, New Developments in Class Actions-Has Their Death Knell Been
Sounded?, 25 Bus. Law. 1259, 1266 (1970) [hereinafter cited as Pomerantz], and only 10 to
15 percent of those remaining file claims once liability has been established or a settlement
approved. Simon, Class Actions-Useful Tool or Engine of Destruction, 55 F.R.D. 375,
379 (1973) [hereinafter cited as Simon].
Although it was initially felt that the reasonably strict de (...truncated)