By: Dan Mogin
Many antitrust and competition law cases are also class actions. Class actions are also common in other substantive areas of complex litigation that employ Competition‘s readers. In keeping with its move toward statewide uniformity in procedural rules, the Judicial Council‘s Complex Litigation Subcommittee drafted procedural rules for the management of class actions. California Rules of Court (“CRC”)1850-1861 became effective January 1, 2002 and apply to virtually all class actions initiated under state law.
California‘s basic laws authorizing class actions, Code of Civil Procedure section 382 (general class actions) and Civil Code section 1781 (Consumer Legal Remedies Act class actions) remain unchanged. Section 382, however, provides virtually no guidance for practical class action procedures. The Consumer Legal Remedies Act (“CLRA”) includes substantially more, but lacks practical procedural rules necessary for implementation or day-to-day administration of class actions.
Prior to adoption of the class action management rules of court, state court class action procedures were drawn from a variety of sources including the CLRA, CCP 382 – 384, former CRC 365, the CRC‘s evolving complex case rules, local class action rules, sporadic case law, federal practice (including Federal Rules of Civil Procedure Rule 23 and the Manual for Complex Litigation), Newberg on Class Actions, and other treatises. As the Drafter‘s Notes for the new rules state “litigants and judicial officers have relied on related statutes, rules, and case law for guidance on procedural issues. These new rules provide clear and consistent rules for class actions to be used by judges and attorneys statewide.”
The new CRC for the management of class action are printed below in their entirety. Readers are encouraged to make their own judgments about whether the new rules merely codify existing procedures, modify them or create new law. Look for such issues to be discussed here as class action practice in the California courts evolves under the new rules. The following is a brief synopsis of the new rules, sans commentary, but with some highlighting of interesting sections.
Rule 1850 states that the rules apply to all cases brought under section 382 or the CLRA. Courts, however, are empowered to relieve compliance where necessary.
Rule 1851 requires that complaints bear the words “CLASS ACTION” on the first page. Each complaint must include a separate section entitled “CLASS ACTION ALLEGATIONS,” describing how the case meets the requirements for class certification. In other words, a complaint must have a separate section alleging that the case meets the familiar litany for class certification, i.e. the class is ascertainable and the existence of a well defined community of interest in the litigation, numerosity, typicality, adequacy, the existence and predominance of common issues “of fact and law, superiority, etc.
Rule 1852 provides for non-evidentiary court conferences to discuss class issues, the conduct and scheduling of discovery, and other scheduling matters.
Rule 1853 allows the court to enter an order dealing with such issues at the conclusion of the conference(s).
Rule 1854 governs motions to certify or decertify a class or amend or modify an order certifying a class. Subsection (a) provides that any party may file such a motion. Subsection (b) states that a “motion for class certification should be filed when practicable” and encourages courts to set a schedule for certification proceedings. Subsection (c) deals with briefing schedules and format issues. Notice of a motion must be filed at least 28 days prior tothe hearing date; opposition briefs must be filed 14 before the hearing; replies are due not less than 5 days before the noticed or continued date of the hearing. Opening and opposition points and authorities must not exceed 20 pages; replies are limited to 15 pages. Required documents (notice of motion; memorandum of points and authorities, declarations and requests for judicial notice) are also listed. Subsection (d) regarding the presentation of evidence requires compliance with CRC 323 during the proceedings. Subsection (e) encourages the parties to resolve any uncontroverted issues by stipulation and allows that if all class issues are resolved by stipulation no hearing on class certification is necessary.
Rule 1855 deals with orders following proceedings under Rule 1854. Such orders must include a description of the class and any subclasses. Subsection (b), states that “when appropriate, an action may be maintained as a class action limited to particular issues”. Subclasses are also allowed.
Rule 1856 governs class notice. Subsection (a) provides that if a class is certified, the court may require either party to give notice. Subsection (b) requires the class proponent to loge both a statement regarding class notice and a proposed notice to class members. The statement must include: (1) whether notice is necessary; (2) whether class members may exclude themselves from the action; (3) the time and manner in which notice should be given; (4) a proposal for which parties should bear the costs of notice; and, (5) if cost shifting or sharing is proposed, an estimate of the cost involved in giving notice. Subsection (c) requires that upon certification of a class, or as soon thereafter as practicable, the court must make an order determining the issues raised listed in subsection (b). Subsection (d) lists the required [minimum] content of class notice in cases where class members are given the right to opt-out.
The notice must include the following:
- A brief explanation of the case, including the basic contentions or denials of the parties;
- A statement that the court will exclude the member from the class if the member so requests by a specified date;
- A procedure for the class member to follow in requesting exclusion from the class;
- A statement that the judgment, whether favorable or not, will bind all members who do not request exclusion; and
- A statement that any member who does not request exclusion may, if the member so desires, enter an appearance through counsel.
Subsection (e) concerns the manner of giving class notice and lists the criteria that the court must consider including, the type of relief requested; the stake of the individual class members; costs of notice; the resources of the parties; possible prejudice to class members who do not receive notice; and the res judicata effect on class members. If personal notice is “unreasonably expensive” or “the stake of individual class members is insubstantial”, or if personal notice “cannot be made” (i.e. in cases where identification of individual class members is difficult, such as in indirect purchaser cases under the Cartwright Act), “the court may order a means of notice reasonably calculated to apprise the class members of the pendency of the action-for example, publication in a newspaper or magazine; broadcasting on television, radio, or the Internet; or posting or distribution through a trade or professional association, union, or public interest group.”
Rule 1857 is entitled “Orders in the conduct of class actions.” It allows the court to make orders that require class notice to be made, (see Rule 1856), including statements regarding the class members‘ opportunity “to seek to appear” and indicate whether they consider the representation fair andadequate, or to be heard regarding of the proposed extent of the judgment. Rule 1857 orders may also impose conditions on the representative parties or on interveners; require that the pleadings be amended to eliminate class allegations; facilitate case management through consolidation, severance, coordination, bifurcation, intervention, or joinder; and address similar procedural matters.
Rule 1858 governs discovery from unnamed class members. It provides that discovery from absent class members may be sought, through service of a subpoena and without a court order, by oral deposition, written deposition, and deposition for production of business records. Interrogatories to absent class members are not permitted without a court order. A class representative or other affected person may move for a protective order to preclude or limit such discovery. In deciding whether to allow such discovery, the court must consider, among other relevant factors: the timing of the request, the subject matter to be covered; materiality, the likelihood that class members have such information, the possibility of reaching factual stipulations that eliminate the need for such discovery, whether the class representatives are seeking discovery on the same subject(s) and whether discovery will result in annoyance, oppression, or undue burden or expense for the members of the class.
Rule 1859 provides a procedural framework for the settlement of class actions. Subsection (a) reiterates former CRC 365 requiring settlements to be approved by the court after a hearing. Subsection (b) requires disclosure in the application for approval or dismissal of any regarding the payment of attorney fees. Subsection (c) requires a written motion for preliminary approval of the settlement. The submission must include the settlement agreement, a proposed class notice and a proposed order for approval. Subsection (d) allows the court to certify a provisional settlement class. Subsection (e) requires that the order granting preliminary approval must include the time, date, and place of the final approval hearing and the class. Under subsection (f), notice of the final approval hearing must be given to the class members in the manner specified by the court and must contain an explanation of the proposed settlement and procedures for class members to follow in filing written objections to it. Subsection (g) requires the court to conduct a fairness hearing before giving final approval. Subsection (h) states that if the settlement is approved the court must enter judgment, which must also include a provision for the retaining jurisdiction over the parties to enforce its terms.
Rule 1860 concerns dismissal of class actions. Dismissal of an entire class action, or of any party or cause of action in a class action, requires court approval. Requests for dismissal must be supported by a declaration setting forth the relevant facts. The declaration in detail any consideration connected to the dismissal. The court may grant the request without a hearing. A disapproval procedure is also established. If the court has certified the class, and notice of the pendency of the action has been provided to class members, notice of the dismissal must be given to the class in the manner specified by the court. If the court has not ruled on class certification, or if notice of the pendency of the action has not been provided to class members,notice of the proposed dismissal may be given in the manner and to those class members specified by the court, or the action may be dismissed without notice to the class members if the court finds that the dismissal will not prejudice them.
With that introduction, we bring you, in their unvarnished entirety, the new California Rules of Court, Management of Class Actions, Rules 1850-1861; produced by the Judicial Council, directed by its Complex Litigation Subcommittee and now playing in courtrooms throughout California. Look for reviews, critics and sequels to appear on these pages and on (computer) screens near you.
* Dan Mogin is the managing shareholder of The Mogin Law Firm , P.C. in San Diego, CA. His practice concentrates on class actions and complex litigation in the antitrust and consumer protection areas, as well as international business matters. He currently serves as Vice Chairœ Publications of the State Bar Section on Antitrust and Unfair Competition Law.
CHAPTER 2. Management of Class Actions
Title 5, Special Rules for Trial Courts-Division V, Complex Cases-Chapter 2,
Management of Class Actions adopted effective January 1, 2002.
Rule 1850. Applicability
Rule 1851. Form of complaint
Rule 1852. Case conference
Rule 1853. Conference order
Rule 1854. Motion to certify or decertify a class or amend or modify an order certifying a class
Rule 1855. Class action order
Rule 1856. Notice to class members
Rule 1857. Orders in the conduct of class actions
Rule 1858. Discovery from unnamed class members
Rule 1859. Settlement of class actions
Rule 1860. Dismissal of class actions
Rule 1861. Judgment
Rule 1850. Applicability
| (a) | [Class actions] The rules contained in Chapter 2 apply to each class action brought under Civil Code section 1750 et seq. or Code of Civil Procedure section 382 until such time as the court finds the action is not maintainable as a class action or revokes a prior certification of the class. |
| (b) | [Relief from compliance with rules] In an appropriate case, the court, on its own motion or on motion of any named party, may grant relief from compliance with these rules. |
Rule 1850 adopted effective January 1, 2002.
Drafter’s Notes: 2002 – Code of Civil Procedure section 382 authorizes class actions generally but does not contain procedures for conducting these actions. As a result, litigants and judicial officers have relied on related statutes, rules, and case law for guidance on procedural issues. These new rules provide clear and consistent rules for class actions to be used by judges and attorneys statewide.
Rule 1851. Form of complaint
| (a) | [Caption of pleadings] A complaint for or against a class party must include in the caption the designation “CLASS ACTION.” This designation must be in capital letters on the first page of the complaint, immediately below the case number but above the description of the nature of the complaint. |
| (b) | [Heading and class action allegations] The complaint in a class action must contain a separate heading entitled “CLASS ACTION ALLEGATIONS,” under which the plaintiff describes how the requirements for class certification are met. Rule 1851 adopted effective January 1, 2002. |
Rule 1852. Case conference
| (a) | [Purpose] One or more conferences between the court and counsel for the parties may be held to discuss class issues, conduct and scheduling of discovery, scheduling of hearings, and other matters. No evidence may be presented at the conference, but counsel must be fully prepared to discuss class issues and must possess authority to enter into stipulations. |
| (b) | [Notice by the parties] Notice of the conference may be given by any party. If notice is given by a named plaintiff, notice must be served on all named parties to the action. If notice is given by a defendant, notice must be served only on the parties who have appeared. Within 10 calendar days after receipt of the notice, plaintiff must serve a copy on each named party who has not appeared in the action and must submit a declaration of service. If plaintiff is unable to serve any party, plaintiff must submit a declaration stating the reasons for failure of service. |
| (c) | [Notice by the court] The court may give notice of the conference to the plaintiff. Within 10 calendar days after receipt of the notice, plaintiff must serve a copy on all parties who have been served in the action, whether they have appeared or not, and must submit a declaration of service. If plaintiff is unable to serve any party, plaintiff must submit a declaration stating the reasons for failure of service. |
| (d) | [Timing of notice] The notice must be filed and served on the parties at least 20 calendar days prior to the scheduled date of the conference. |
| (e) | [Timing of conference] A conference may be held at any time after the first defendant has appeared. Prior to selecting a conference date, the party noticing the conference must (1) obtain prior approval from the clerk of the department assigned to hear the class action and (2) make reasonable efforts to accommodate the schedules of all parties entitled to receive notice under subdivision (b). |
Rule 1852 adopted effective January 1, 2002.
Rule 1853. Conference order
At the conclusion of the conference, the court may make an order:
(1) Approving any stipulations of the parties;
(2) Establishing a schedule for discovery;
(3) Setting the date for the hearing on class certification;
(4) Setting the dates for any subsequent conferences; and
(5) Addressing any other matters related to management of the case.
Rule 1853 adopted effective January 1, 2002.
Rule 1854. Motion to certify or decertify a class or amend or modify an order certifying a class
| (a) | [Purpose] Any party may file a motion to: (1) Certify a class; (2) Determine the existence of and certify subclasses; (3) Amend or modify an order certifying a class; or (4) Decertify a class. |
| (b) | [Timing of motion, hearing, extension, deferral] A motion for class certification should be filed when practicable. In its discretion, the court may establish a deadline for the filing of the motion, as part of the case conference or as part of other case management proceedings. Any such deadline must take into account discovery proceedings that may be necessary to the filing of the motion. |
| (c) | [Format and filing of motion] (1) Notice of a motion to certify or decertify a class or to amend or modify a certification order must be filed and served on all parties to the action at least 28 calendar days prior to the date appointed for hearing. Any opposition to the motion must be served and filed 14 calendar days preceding the noticed or continued hearing, unless the court for good cause orders otherwise. Any reply to the opposition must be served and filed not less than 5 calendar days preceding the noticed or continued date of the hearing, unless the court for good cause orders otherwise. The provisions of Code of Civil Procedure section 1005 otherwise apply. (2) An opening or responding memorandum of points and authorities filed with respect to a motion for class certification must not exceed 20 pages. A reply memorandum must not exceed 15 pages. The provisions of rule 313 otherwise apply. (3) The documents in support of a motion for class certification consist of the notice of motion; a memorandum of points and authorities in support of the motion; evidence in support of the motion in the form of declarations of counsel, class representatives, or other appropriate declarants; and any requests for judicial notice. The documents in opposition to the motion consist of the opposing party’s memorandum of points and authorities; the opposing party’s evidence in opposition to the motion, including any declarations of counsel or other appropriate declarants; and any requests for judicial notice. |
| (d) | [Presentation of evidence] Evidence to be considered at the hearing must be presented in accordance with rule 323. |
| (e) | [Stipulations] The parties should endeavor to resolve any uncontroverted issues by written stipulation before the hearing. If all class issues are resolved by stipulation of the named parties and approved by the court before the hearing, no hearing on class certification is necessary. |
Rule 1854 adopted effective January 1, 2002.
Rule 1855. Class action order
| (a) | [Class described] An order certifying, amending, or modifying a class must contain a description of the class and any subclasses. |
| (b) | [Limited issues and subclasses] When appropriate, an action may be maintained as a class action limited to particular issues. A class may be divided into subclasses. |
Rule 1855 adopted effective January 1, 2002.
Rule 1856. Notice to class members
| (a) | [Party to provide notice] If the class is certified, the court may require either party to notify the class of the action in the manner specified by the court. | ||||||||||||||
| (b) | [Statement regarding class notice] The class proponent must submit a statement regarding class notice and a proposed notice to class members. The statement must include the following items:
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| (c) | [Order] Upon certification of a class, or as soon thereafter as practicable, the court must make an order determining:
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| (d) | [Content of class notice] The content of the class notice is subject to court approval. If class members are to be given the right to request exclusion from the class, the notice must include the following:
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| (e) | [Manner of giving notice] In determining the manner of the notice, the court must consider:
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Rule 1856 adopted effective January 1, 2002.
Rule 1857. Orders in the conduct of class actions
| (a) | In the conduct of a class action the court may make orders that:
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| (b) | The orders may be altered or amended as necessary. |
Rule 1857 adopted effective January 1, 2002.
Rule 1858. Discovery from unnamed class members
| (a) | [Types of discovery permitted] The following types of discovery may be sought, through service of a subpoena and without a court order, from a member of a class who is not a party representative or who has not appeared:
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| (b) | [Motion for protective order] A party representative, deponent, or other affected person may move for a protective order to preclude or limit the discovery. | ||||||||||||||
| (c) | [Interrogatories require court order] party may not serve interrogatories on a member of a class who is not a party representative or who has not appeared, without a court order. | ||||||||||||||
| (d) | [Determination by court] In deciding whether to allow the discovery requested under subdivision (a) or (c), the court must consider, among other relevant factors:
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Rule 1858 adopted effective January 1, 2002.
Rule 1859. Settlement of class actions
| (a) | [Court approval; hearing] A settlement or compromise of an entire class action, or of a cause of action in a class action, or as to a party, requires the approval of the court after hearing. |
| (b) | [Attorney fees] Any agreement, express or implied, that has been entered into with respect to the payment of attorney fees or the submission of an application for the approval of attorney fees must be set forth in full in any application for approval of the dismissal or settlement of an action that has been certified as a class action. |
| (c) | [Preliminary approval of settlement] Any party to a settlement agreement may submit a written notice of motion for preliminary approval of the settlement. The settlement agreement and proposed notice to class members must be filed with the motion, and the proposed order must be lodged with the motion. |
| (d) | [Order certifying provisional settlement class] The court may make an order approving or denying certification of a provisional settlement class after the preliminary settlement hearing. |
| (e) | [Order for final approval hearing] If the court grants preliminary approval, its order must include the time, date, and place of the final approval hearing; the notice to be given to the class; and any other matters deemed necessary for the proper conduct of a settlement hearing. |
| (f) | [Class notice] f the court has certified the action as a class action, notice of the final approval hearing must be given to the class members in the manner specified by the court. The notice must contain an explanation of the proposed settlement and procedures for class members to follow in filing written objections to it and in arranging to appear at the settlement hearing and state any objections to the proposed settlement. |
| (g) | [Conduct of final approval hearing] Before final approval, the court must conduct an inquiry into the fairness of the proposed settlement. |
| (h) | [Judgment] If the court approves the settlement agreement after the final approval hearing, the court must make and enter judgment. The judgment must include a provision for the retention of the court’s jurisdiction over the parties to enforce the terms of the judgment. |
Rule 1859 adopted effective January 1, 2002.
Rule 1860. Dismissal of class actions
| (a) | [Court approval] A dismissal of an entire class action, or of any party or cause of action in a class action, requires court approval. Requests for dismissal must be accompanied by an affidavit or a declaration setting forth the facts on which the party relies. The affidavit or declaration must clearly state whether consideration, direct or indirect, is being given for the dismissal and must describe the consideration in detail.(Subd (a) amended and numbered effective January 1, 2002; adopted as untitled subdivision effective January 1, 1984.) |
| (b) | [Hearing] The court may grant the request without a hearing. If the request is disapproved, notice of tentative disapproval must be sent to the attorneys of record. Any party may seek, within 15 calendar days of the service of the notice of tentative disapproval, a hearing on the request. If no hearing is sought within that period, the request for dismissal will be deemed denied.(Subd (b) amended and numbered effective January 1, 2002; adopted as untitled subdivision effective January 1, 1984.) |
| (c) | [Class notice] If the court has certified the class, and notice of the pendency of the action has been provided to class members, notice of the dismissal must be given to the class in the manner specified by the court. If the court has not ruled on class certification, or if notice of the pendency of the action has not been provided to class members in a case in which such notice was required, notice of the proposed dismissal may be given in the manner and to those class members specified by the court, or the action may be dismissed without notice to the class members if the court finds that the dismissal will not prejudice them.(Subd (c) adopted effective January 1, 2002.) |
Rule 1860 amended and renumbered effective January 1, 2002; adopted as rule 365 effective January 1, 1984.
Rule 1861. Judgment
The judgment in an action maintained as a class action must include and describe those whom the court finds to be members of the class. Notice of the judgment must be given to the class in the manner specified by the court.
Rule 1861 adopted effective January 1, 2002.