United States: Class Actions Comparative Guide

1 Legal framework

1.1 Is there a dedicated class action regime in your jurisdiction? If not, how is collective action typically brought?

Based on the US Constitution and its concept of federalism – meaning that governmental powers are shared between the federal government and state governments – the United States has two separate court systems: federal and state. State courts are established by the laws of each state and have broad jurisdiction. Federal courts are established under the US Constitution and have a much narrower jurisdiction. Class actions may be filed in state or federal courts.

In federal courts, class actions are governed by Rule 23 of the Federal Rules of Civil Procedure. State court jurisdictions have their own counterpart to Rule 23. A class action complaint technically proceeds as an individual action unless and until the court enters an order 'certifying' the action as class action. To achieve class action status, the plaintiffs must file a formal motion for class certification, at which time the court determines whether the plaintiffs have proven that each element of Rule 23 has been satisfied by the proofs.

In order for a class to be certified in federal court, Rule 23(a) requires plaintiffs to prove that the following requirements are met:

• The class is so numerous that the joinder of all members is impracticable;
• There are questions of law or fact common to the class;
• The claims or defences of the representative parties are typical of the claims or defences of the class; and
• The representative parties will fairly and adequately protect the interests of the class.

In meeting the Rule 23 requirements, some federal jurisdictions also require the plaintiff to show that the class is 'ascertainable', meaning that the class members may be identified in a feasible manner. In addition, plaintiffs must satisfy at least one of the requirements in Rule 23(b) as follows:

• Separate adjudications will create a risk of decisions that are inconsistent with or dispositive of other class members' claims;
• Declaratory or injunctive relief is appropriate based on the defendant's acts with respect to the class generally; or
• Common questions predominate and a class action is superior to individual actions.

1.2 Do any special regimes apply in specific sectors?

There are no special requirements for class actions depending on the industry or sectors involved in the action. Every federal and state jurisdiction has its own set of procedural rules. Substantive claims are governed by the statute alleged to have been violated or the state common law under which the claim is asserted.

1.3 Are the courts in your jurisdiction generally considered sympathetic to class actions?

The US Supreme Court has explained that the "class action is 'an exception to the usual rule that litigation is conducted by and on behalf of the individual named parties only'". Thus, achieving class certification is neither automatic nor guaranteed. It is the plaintiff's burden to prove that a class should be certified. The parameters of what the plaintiff must prove and the burden of proof vary by jurisdiction.

Generally, certain state courts have been known to be more sympathetic to class actions than federal courts. Though the rules for class certification are similar, the manner in which certain state courts interpret the class action rules gives the impression that the state courts are far more favourable for plaintiffs. Thus, class action plaintiffs often file class action complaints in state court whenever possible, while defendants often try to 'remove' such cases to federal court.

In fact, state court 'sympathies' for class actions against corporate defendants made certain state jurisdictions notorious for class action abuse and state court 'forum shopping'. These perceived abuses led to the enactment of the federal Class Action Fairness Act of 2005 (CAFA) – perhaps the most significant change to class action practice in many years. CAFA sought to prevent this type of state court forum shopping by granting the federal courts jurisdiction over class actions involving more than 100 class members and over $5 million in controversy, among other requirements.

2 Parties

2.1 Who has standing to bring a class action in your jurisdiction?

The US Supreme Court has explained that in order to establish standing in federal courts, a plaintiff must show that:

• he or she has suffered an 'injury in fact' that is:
• • concrete;
  • particularised; and
  • actual or imminent;
• the injury was likely caused by the defendant; and
• the injury would likely be redressed by judicial relief.

If "the plaintiff does not claim to have suffered an injury that the defendant caused and the court can remedy, there is no case or controversy for the federal court to resolve".

Certain harms, according to the Supreme Court, readily qualify as concrete injuries. The most obvious are traditional tangible harms, such as physical harms and monetary harms. If a defendant has caused physical or monetary injury to the plaintiff, the plaintiff has suffered a concrete 'injury in fact'. Various intangible harms can also be concrete, such as the disclosure of private information. The question of standing to assert an intangible harm is now a hotly litigated issue, especially given the rise of data breach class actions over the last few years.

In addition, Congress may impose a statutory prohibition or obligation on a defendant; and may grant a plaintiff a cause of action to sue over the defendant's violation of that statutory prohibition or obligation. Importantly, however, the Supreme Court has rejected the proposition that "a plaintiff automatically satisfies the 'injury-in-fact' requirement whenever a statute grants a person a statutory right and purports to authorize that person to sue to vindicate that right". "Article III standing requires a concrete injury even in the context of a statutory violation."

2.2 Can representative bodies bring class actions in your jurisdiction? If so, which bodies may do so and what is the applicable procedure?

Federal courts and most state courts recognise the ability of representative bodies to assert claims on behalf of their members, though such class actions are not common. 'Associational standing' permits an entity to sue over injuries by its members even when the entity itself alleges no injury. As one jurisdiction has held, to satisfy the test for associational standing, an association must show that:

• its members would otherwise have standing to sue in their own right;
• the interests that the suit seeks to protect are germane to the organisation's purpose; and
• neither the claim asserted nor the relief requested requires the participation of individual members in the lawsuit.

2.3 Can parties outside the jurisdiction be members of a class action? What requirements and restrictions apply in this regard?

The answer here depends on whether 'outside the jurisdiction' refers to an individual who is a resident or citizen of a foreign country. Though there is nothing in the text of Rule 23 that prohibits a foreign citizen from being a member of a class, as a practical matter, a class action lawsuit in the United States that purports to include foreign citizens will not likely succeed in achieving class certification.

Certainly, an individual who is a citizen or resident of one state (eg, New Jersey) may be a class member in a class action lawsuit instituted in another state (eg, New York). By way of further example, two named plaintiffs could file a class action complaint in federal court in Massachusetts to sue the seller of a dietary supplement product based on alleged false label claims. One named plaintiff is a citizen of Massachusetts and brings claims on behalf of a class of citizens of Massachusetts who purchased the product. The second named plaintiff may be a citizen of Illinois and assert claims on behalf of all citizens of Illinois who purchased the product. There is no restriction per se to being a party outside the jurisdiction in this sense. However, cases that propose multi-state classes or nationwide classes will likely be more difficult to achieve class action status because the complexity of involving multiple states' laws may make a class action unmanageable.

2.4 Which parties may be the target of a class action? Can parties outside the jurisdiction be the target of a class action? What requirements and restrictions apply in this regard?

Public and private companies, governmental entities and individuals can all be named as class action defendants. Generally speaking, if a company is doing business in a particular state or states, or if its products are sent to persons or entities in those states, that business should reasonably expect that it could be sued in those states given its business activities or 'contacts' within that jurisdiction.

A court's power to resolve disputes requires both:

• personal jurisdiction over the parties; and
• subject-matter jurisdiction over the type of claim.

Personal jurisdiction centres on the protection of a defendant's constitutional right to due process. The Supreme Court has previously rejected attempts to allow Rule 23 to alter or abridge that constitutional right.

For the exercise of personal jurisdiction to satisfy the due process clause in the Fourteenth Amendment of the US Constitution, defendants must have 'minimum contacts' with the forum state. Personal jurisdiction can be general or specific. Courts have 'general' jurisdiction over defendants whose in-state activities render them 'at home' in the forum. Assuming that subject-matter jurisdiction is also proper, general jurisdiction allows a court to hear all claims against a defendant – notwithstanding the location of the defendant's conduct and the connection of the plaintiffs' injuries thereto. If general jurisdiction is lacking, a court may still exercise 'specific' jurisdiction if:

• the defendant "purposefully avails" itself of the benefits of doing business in the forum state; and
• the plaintiffs' injuries "arise out of or relate to" the defendant's in-state conduct.

Unlike general jurisdiction, courts must limit their exercise of specific jurisdiction to claims with a connection to activities in the forum state (ie, the state in which the suit is brought).

2.5 Do class actions proceed on an opt-in or opt-out basis?

In certain types of class actions, a member of the class may decide to participate or not participate in a certified class action or negotiated class settlement. Generally, class actions seeking certification of a class for money damages, referred to as Rule 23(b)(3) classes, will be 'opt-out' classes, meaning that a class member must opt out in order to be excluded from the settlement. A class member may choose to opt out of a Rule 23(b)(3) damages class action in order to preserve the right to assert his or her claims on an individual basis in a separate lawsuit, presumably to attempt a greater recovery. However, electing to do so may force that person to incur greater litigation costs on an individual basis, rather than spreading those costs among class members.

In damages class actions, class notice must be issued to class members, which is subject to court approval and supervision. The class notice alerts class members:

• of the existence of the class action lawsuit, the basic facts and contentions alleged in the action;
• that there may be a class action settlement;
• that the individual receiving notice may be a member of the class;
• that the individual may elect to opt out of the settlement; and
• that if the individual does not exercise his or her right to opt out, he or she will be bound by the terms of the class settlement.

Class actions seeking certification of a class for injunctive relief only – referred to as 'Rule 23(b)(2) classes' – may not opt out, as the relief is considered mandatory.

In addition to the right to opt out of a damages class action, members of any class action –even 'mandatory' actions under Rule 23(b)(1) or 23(b)(2) – have the option to object to a proposed settlement. In theory, the right to object to a settlement provides a check on the reasonableness of a class settlement: the court can look to the views of class members as a counterweight to the views of counsel and the representative parties, who may be biased in favour of approval.

An 'opt-in' procedure is used for 'collective actions'. Collective actions, not technically class actions, are employment-related actions brought under the Fair Labor Standards Act (FLSA) on behalf of an employee and other similarly situated current or former employees.

The FLSA requires individual employees to affirmatively consent in writing to becoming a party to a collective action; one who does not consent to join the collective action neither benefits from, nor is bound by, the judgment in the lawsuit.

3 Forum

3.1 In what forum(s) are class actions heard in your jurisdiction?

Class actions are heard in state and federal courts. Federal courts are courts of limited jurisdiction. Lawsuits may be brought in federal courts where there is subject-matter jurisdiction raising a federal question (eg, actions that arise under the US Constitution or federal statutes). In addition, lawsuits may be brought in federal courts where there is 'diversity jurisdiction' – for example, where the parties are citizens of different states and a minimum monetary threshold is satisfied.

The Class Action Fairness Act of 2005 (CAFA) significantly expanded federal diversity jurisdiction over class actions and mass actions by:

• allowing the aggregation of the individual class member claims to meet a new threshold 'amount in controversy' requirement of $5 million; and
• changing the 'complete diversity' requirement to minimal diversity for class actions, to allow jurisdiction where at least one class member is from a state where at least one defendant is from.

CAFA also allows the defendant in a state court class action lawsuit that meets the jurisdictional requirements of CAFA to automatically 'remove' (or transfer) the class action lawsuit from state to federal court, using CAFA as the basis for federal jurisdiction.

Class action arbitration is very rare. Unless an arbitration agreement explicitly provides that the parties consent to class-wide arbitration, arbitrations will not proceed on a class-wide basis.

3.2 Who hears class actions in your jurisdiction (eg, judges or juries)?

Motions for class certification concern a question of law to be decided by a judge. Similarly, dispositive motions, such as motions for summary judgment, are decided by judges and have the opportunity to end the case before it goes to trial on the grounds that there are no undisputed issues of material fact.

The underlying merits of class actions may be decided by a judge or a jury and will depend on the legal claims being asserted. Some causes of action may be heard by a jury as of right; while other claims do not afford the right to a jury trial and fact finding is determined by a judge.

3.3 Is there any opportunity for class action forum shopping in your jurisdiction? If so, what are the implications?

'Forum shopping' refers to the practice of pursuing a claim subject to concurrent jurisdiction in the court that will treat the claim most favourably. Forum shopping is disfavoured; however, plaintiffs frequently attempt to file in friendly jurisdictions. For example, in smaller class actions, plaintiffs may attempt to create a complaint that limits recovery to citizens of a state or otherwise plead the complaint in a manner so as to avoid federal court jurisdiction through CAFA.

Forum shopping can occur between:

• courts in different states;
• federal and state courts in the same state; or
• courts in separate countries.

While forum shopping is still permitted under limited circumstances, the practice is generally discouraged due to conflict of law rules.

4 Bringing a class action

4.1 What is the limitation period for bringing a class action in your jurisdiction? What requirements and restrictions apply in this regard?

Because the class action rules are merely a procedural device, the applicable statute of limitations will depend on the underlying cause of action asserted. State and federal statutes often specify the statute of limitations. Common law claims will be constrained by state common law, even if the cause of action is asserted in federal court.

Statutes of limitations are often woven into the proposed class definition. While some complaints initially specify the covered timeframe – for example, "Anyone in the US who purchased products from Company within the past six years" – others simply state that the lawsuit will cover claims "within the applicable statute of limitations". If a complaint does not state the covered timeframe, the motion for class certification must identify the covered timeframe in order for the court to certify the class.

A few years ago, the Supreme Court held that the filing of a class action does not toll the statute of limitations for putative class members to file their own class actions. This means that if class certification is denied, putative class members cannot file successive class actions after the statute of limitations has expired.

4.2 Do collective actions require certification? If so, what requirements must be met to obtain certification?

Collective actions can be asserted under the federal Fair Labor Standards Act (FLSA). The FLSA requires individual employees to affirmatively consent in writing to becoming a party to a collective action under the FLSA. An individual who does not consent to join the collective action neither benefits from, nor is bound by, the judgment in the lawsuit.

Courts use a two-phase inquiry to determine whether to certify a collective action under the FLSA. During the first stage (the 'conditional certification' stage), the standard for certification requires only a 'modest factual showing' that the plaintiff is similarly situated to the other employees they seek to notify of the action. This standard is relatively liberal and frequently results in conditional certification of the collective action. Following more detailed discovery, the court employs a stricter standard to determine whether the filing plaintiff(s) and the other collective action members are sufficiently similar to certify the collective action.

4.3 What are the formal requirements for bringing a class action?

Rule 23 of the Federal Rules of Civil Procedure governs the requirements for class actions. The plaintiff must file a formal motion to certify the class; certification is not automatic or guaranteed. The type of supporting evidence that must accompany a motion to certify will depend on the facts and circumstances of the lawsuit.

4.4 What are the procedural and substantive requirements for bringing a class action? Do any minimum thresholds apply in this regard?

See question 1.1.

4.5 How are potential class members notified of the proceedings? Is there a deadline by which they must join the class action?

In a class action lawsuit, potential class members are typically notified through a legal process known as 'class action notification'. The specific method of notification can vary depending on the jurisdiction and the nature of the lawsuit. Common methods of notification include:

• mailed notices;
• publication in newspapers or magazines;
• posting on websites; and
• sometimes even television or radio advertisements.

The goal is to reach as many potential class members as possible to inform them about:

• their rights;
• the lawsuit; and
• the option to join or opt out of the class action.

The notification process is designed to ensure that individuals who may be affected by the lawsuit have an opportunity to participate and make informed decisions. The notice should contain information about the claims in the case and any obligations by which class members must abide.

4.6 How is jurisdiction over the class action determined?

Jurisdiction over a class action lawsuit is determined based on several factors, including the location where the lawsuit is filed and the applicable laws. Key considerations include the following:

• Subject-matter jurisdiction: The court must have the authority to hear the specific type of legal claim raised in the class action. This typically involves assessing whether the court has jurisdiction over the subject matter of the lawsuit, such as a particular area of law or a specific legal issue.
• Personal jurisdiction: The court must have jurisdiction over the defendants involved in the class action. Personal jurisdiction is generally determined based on factors such as the defendant's presence or activities within the court's geographic jurisdiction.
• Venue: The lawsuit must be filed in a proper venue, which is usually a court located in a jurisdiction where:
• • the defendants reside;
  • the events giving rise to the lawsuit occurred; or
  • the majority of the potential class members are located.
• Class certification: Once a lawsuit has been filed, the court will evaluate whether it meets the requirements for class certification, which includes determining whether the proposed class satisfies the necessary criteria for certification under applicable laws or rules.

4.7 How is the applicable law determined?

The law applied in a class action will depend on the causes of action asserted in the complaint. Federal law will apply to cases asserting claims under federal statutes, federal regulations or the US Constitution. State law will apply to cases asserting claims under state statutes, state regulations, state constitutions and state common law causes of action.

Federal court class actions involving state law causes of action on behalf of class members from multiple states often present complex 'choice of law' questions because the state law applicable to class members from one state may not be the same as the state law applicable to other class members from different states. Different jurisdictions may have varying laws and standards that could affect the outcome of the class action. Further, the need to apply different laws or standards for different class members may create individual issues that weigh against class certification.

The choice of law in class actions is typically determined by the court overseeing the case. Courts may apply different approaches to determine which jurisdiction's laws should govern, such as the following:

• The law of the forum: In some cases, the court may apply its own jurisdiction's laws as the governing law for the class action, particularly if the lawsuit was filed in that jurisdiction.
• The law with the most significant relationship: Courts may analyse the relevant facts, such as where:
• • the events giving rise to the lawsuit occurred; or
  • the majority of the affected class members are located.
• They will then determine which jurisdiction has the most significant relationship to the case and apply the laws of that jurisdiction.
• Choice of law clauses: If the parties involved in the class action have included a choice of law provision in their contracts or agreements, the court may give weight to those provisions and apply the chosen jurisdiction's laws.

Determining the choice of law in class actions can be complex, as it involves considering various factors and legal principles. Courts strive to ensure fairness and consistency in applying the appropriate laws to the class action, taking into account the interests of the parties and affected class members.

4.8 Under what circumstances (if any) must security for costs be provided?

None.

5 Disclosure and privilege

5.1 What rules apply to disclosure in your jurisdiction? Do any exceptions apply?

Discovery is a key focus of class action litigation. In order to rule on a motion for class certification, a court must ensure that an adequate factual basis exists for a full evaluation of all requirements of Rule 23 of the Federal Rules of Civil Procedure. In addition, the parties must obtain the factual basis for the prosecution or defence of the merits of their claims.

Discovery can take the form of:

• written discovery requests and responses, which may result in many objections and very little substantive knowledge;
• document production; and
• testimony in the form of depositions under oath.

Generally, discovery obligations are more burdensome for class action defendants than for plaintiffs.

Any party may obtain discovery regarding any matter that is not privileged and is relevant to the subject matter involved in the pending action or to the determination of any motion made in that action, if the matter either is itself admissible in evidence or appears reasonably calculated to lead to the discovery of admissible evidence.

Even confidential information can be discoverable, though its use is usually governed by a protective order. In addition, discovery of absent class members is generally not allowed.

5.2 What rules on third-party disclosure apply in your jurisdiction? Do any exceptions apply?

A party may serve third-party discovery on a non-party in the form of a subpoena. A subpoena may command a witness to:

• testify at a deposition, hearing or trial (testimonial subpoena); or
• produce or make available for inspection documents, electronically stored information or other tangible items (document subpoena).

The subpoena must use the approved form used in the jurisdiction in which the case is pending and usually must include:

• the case name and docket information;
• the identity of the person to whom the subpoena is directed;
• the witness's rights and duties in responding, objecting or moving to quash the subpoena;
• the time and place for either:
• • the production or inspection of documents; or
  • attendance at a hearing, trial or deposition (known as the 'return date');
• the categories of documents sought (if the subpoena commands the production or inspection of documents); and
• the method for recording testimony (if applicable).

The subpoena must be formally served on the recipient, similar to a summons for a complaint, because it is a form of judicial process by which the issuing court obtains jurisdiction over a non-party. To obtain jurisdiction over a non-party, the issuing party must properly serve the subpoena.

When using a subpoena to obtain evidence, the issuing party must avoid imposing undue burden or expense on a witness that is subject to the subpoena. A person or entity may move to quash the subpoena or for a protective order, but only under limited circumstances.

5.3 What rules on privilege apply in your jurisdiction? Do any exceptions apply?

'Attorney-client privilege' refers to legal privilege that works to keep confidential communications between attorney and client private. Communications made to and by a lawyer in the presence of a third party may not be entitled to this privilege on the grounds that they are not confidential. The substance of the communication must also pertain to legal advice, counselling or strategy.

There are limited exceptions to attorney-client privilege. The two most common are as follows:

• Crime/fraud exception: There is no attorney-client privilege when the services of the lawyer were sought or obtained to enable or aid anyone to commit or plan to commit what the client knew was a crime or fraud.
• Breach of duty: There is no lawyer-client privilege when a communication is relevant to an issue of breach of duty by the lawyer to the client or by the client to the lawyer, arising from the lawyer-client relationship.

In addition, there are several privileges that are less common in the class action context, such as spousal privilege and doctor/patient privilege.

5.4 What are the specific implications of the rules on disclosure and privilege in class action proceedings?

All rules related to discovery/disclosure and privilege apply equally in class action proceedings.

6 Evidence

6.1 What types of evidence are permissible in your jurisdiction? Is expert evidence accepted?

Admissible evidence is any document, testimony or tangible, physical item that can be used to prove a fact at issue in a hearing or trial in a court of law under the rules of evidence. Rules of evidence determine what types of evidence are admissible and the trial court judge applies these rules to the case. Generally, to be admissible, the evidence must be relevant and not outweighed by countervailing considerations (eg, the evidence is unfairly prejudicial, confusing, a waste of time, privileged or based on hearsay, among other reasons).

Expert evidence is admissible, subject to certain requirements. The Federal Rules of Evidence provide that a witness who is qualified as an expert by knowledge, skill, experience, training or education may testify in the form of an opinion or otherwise if:

• the expert's scientific, technical or other specialised knowledge will help the trier of fact to understand the evidence or determine a fact in issue;
• the testimony is based on sufficient facts or data;
• the testimony is the product of reliable principles and methods; and
• the expert has reliably applied the principles and methods to the facts of the case.

6.2 What is the applicable standard of proof in your jurisdiction?

In most civil cases, the standard of proof is a 'preponderance of the evidence'. This standard requires the jury to return a judgment in favour of the plaintiff if the plaintiff can show that a particular fact or event is more likely than not to have occurred.

6.3 On whom does the burden of proof rest in class action proceedings?

The plaintiff bears the burden of proving that the prerequisites for class certification have

been met by a preponderance of the evidence. Until a few years ago, lower courts struggled to reconcile the US Supreme Court's conflicting statements that they must conduct a 'rigorous analysis' of whether the prerequisites for class certification have been met, but at the same time must not inquire into the merits of the plaintiff's claims – even though the merits are often highly relevant to a Rule 23 analysis. Also, while some courts assumed the truth of the plaintiff's factual and legal allegations, other courts allowed defendants to assert evidence-based challenges.

6.4 What are the specific implications of the rules on evidence in class action proceedings?

A 2013 US Supreme Court decision explained that a party seeking class certification must satisfy the requirements of Rule 23 of the Federal Rules of Civil Procedure through evidentiary proof. While the court's opinion stressed the need for evidentiary proof, it did not directly address whether the proffered evidence must be admissible.

Since that decision, in many – but not all – jurisdictions, expert testimony relied on by a trial court in certifying a class must satisfy admissibility standards (commonly referred to by the leading case name, Daubert) in order to be considered in support of or opposition to a motion for class certification.

Courts also differ as to whether non-expert evidence must be admissible to be considered on class certification.

7 Settlement

7.1 Can the class action proceedings be discontinued without a full trial? If so, how, and what are the implications?

Yes, if a class action complaint is not dismissed during the litigation by the court, the parties may still avoid a full trial if they voluntarily agree to a settlement before trial. Although a lawsuit may be filed as a proposed class action, it does not officially become a class action until the court has entered an order granting a motion for class certification. If the case has not yet been certified as a class action, it may be possible to settle the lawsuit like any other lawsuit – that is, by a simple agreement among the named parties to the lawsuit. In a pre-certification individual settlement, the named plaintiff has not yet been designated by the court as a 'class representative' and therefore can only release his or her claims, not the claims of any class members. Thus, such an 'individual settlement' does not involve class members at all and does not prohibit any other potential class members from filing lawsuits based on the same allegations and requesting the same relief. Individual settlements typically arise in low-value actions where the risk of future lawsuits is low.

More traditionally, class action lawsuits may be settled before trial on a class-wide basis if:

• the court has entered an order certifying the class; or
• the parties agree to class certification for settlement purposes only.

To settle on a class-wide basis, the parties to the lawsuit must agree on the essential terms of a class settlement, including providing some type of economic relief and/or injunctive relief to all members of the certified class. When a court certifies a class –whether by agreement or otherwise – the court designates some or all of the named plaintiffs as 'class representatives', who are then authorised to agree to the terms of the settlement on behalf of a class. In exchange for the agreement to provide settlement benefits to the class, the class representatives agree, on behalf of a certified class, to forever release and discharge class members' rights against the defendants, meaning that future litigation by any class member that challenges the same conduct will be barred.

7.2 Is court approval of the settlement required? If so, what factors will the court consider in this regard?

A lawsuit filed as a class action may be settled as an ordinary lawsuit if the class is not certified. A pre-certification 'individual settlement' typically does not require court approval and provides settlement benefits only to the named plaintiffs.

However, the claims of a certified class – or a class proposed to be certified for purposes of settlement – may be settled, voluntarily dismissed or compromised only with the court's approval. Rule 23(e) of the Federal Rules of Civil Procedure – or the state class action rule if the matter is in state court – specifies the procedures.

Class notice: In class actions seeking damages, class members must be given class notice of the potential class action settlement (which must be approved by the court) because the rights of class members will be affected by the settlement. The class notice to class members must be the "best notice that is practicable under the circumstances", including "individual notice to all members who can be identified through reasonable effort". As class members' rights will be affected by the settlement, the class notice will advise class members that they have the right to:

• opt out of the class settlement (ie, not join the settlement); or
• object to the terms of the settlement.

By choosing to opt out of a class action settlement, a class member will be unable to claim any part of the settlement funds, but will retain the right to file his or her own individual lawsuit in the future.

Motion for preliminary approval: As a practical matter, once a class action settlement has been reached among the parties, the plaintiffs (sometimes joined by the defendants) will file a motion for preliminary approval of class action settlement. The motion will explain the nature of the claims in the litigation and the terms of the settlement, and will annex a copy of the settlement agreement. The motion must also demonstrate that the settlement is fair and reasonable to class members. The court's preliminary approval order ordinarily will:

• direct that class notice be given to the class and a schedule set for when class members must elect to opt out of the settlement; and
• describe the procedures for presenting the court with any objections to the class settlement.

Final approval hearing and order: The court may grant final approval of a class action settlement only after a hearing (sometimes referred to as a 'fairness hearing'). The court may grant final approval only if it concludes that the settlement is fair, reasonable and adequate. In this regard, according to Rule 23(e)(2) of the Federal Rules of Civil Procedure, the court must assess whether:

• "the class representatives and class counsel have adequately represented the class";
• "the proposal was negotiated at arm's length";
• "the relief provided for the class is adequate", after accounting for:
• • "the costs, risks, and delay of trial and appeal";
  • "the effectiveness of any proposed method of distributing relief to the class including the method of processing class-member claims";
  • "the terms of any proposed award of attorneys' fees, including timing of payment"; and
  • "any agreement required to be identified under Rule 23(e)(3)"; and
• "the proposal treats class members equitably relative to each other".

8 Court proceedings

8.1 Are court proceedings in your jurisdiction public or private? If the former, are any options available to the parties to keep the proceedings or related information confidential?

As a general rule, court proceedings are public. However, court proceedings may be closed for a variety of reasons, including the need to protect the parties' privacy, confidential business information or trade secrets. Typically:

• the parties will enter into a confidentiality agreement; or
• the court will enter an order for confidentiality to prohibit the dissemination of confidential documents and information to anyone other than the parties, experts or consultants involved in the litigation.

If confidential documents are filed with the court, they are filed in redacted form under specified rules and procedures in each jurisdiction. Similarly, if confidential information is discussed in court proceedings, the transcripts of those proceedings can be redacted before becoming public.

8.2 What approaches do the courts typically take to class action proceedings? Are preliminary issues commonly tried first, or are test cases commonly heard? What are the implications of these different approaches for the proceedings?

The manner in which class action trials proceed varies widely, depending on:

• the complexity and subject matter of the lawsuit;
• the state in which the action is filed;
• whether the action is proceeding in state or federal court; and
• the particular judge presiding over the matter.

In a case with a large number of class members asserting damages claims, it is not uncommon for a court to proceed with the trial on the liability issues first, while reserving damages questions for later proceedings.

Test cases in class actions are possible but are more common in mass tort cases. Mass tort actions usually involve large numbers of lawsuits against the same defendant(s) by individuals who allege personal injuries. Since such mass tort cases raise the same liability theory, a test case will often be an effective way to manage a large docket of cases on the assumption that the test case will show the parties the likely outcome of later cases.

In contrast, where there are large numbers of class action lawsuits against the same defendant(s) by individuals alleging the same type of economic injury, the lawsuits can sometimes be consolidated for pre-trial proceedings or for trial, depending on the circumstances.

8.3 How do class action proceedings unfold in your jurisdiction?

Class actions lawsuits tend to be filed when class action plaintiff attorneys believe that some wrongful conduct has harmed a large number of persons economically. The circumstances vary greatly depending on the industries involved. Product recalls, product failures or news about particular products, product labels and the like will often spur attorneys to investigate whether a class action lawsuit may be appropriate. Attorney advertising is another effective means of locating individuals who may be interested in serving as a class representative plaintiff in a class action.

8.4 What is the typical timeframe for class action proceedings?

It is difficult to identify a 'typical' timeframe for a class action proceeding, because class action lawsuits can:

• be filed in a multiplicity of circumstances;
• have varying degrees of complexity; and
• be resolved via settlement at almost any time during the course of an action.

Some class actions may last two years, while others take much longer to get to trial.

8.5 Is the decision issued in class action proceedings binding on all members of the class?

This depends on the decision at issue. If a class is certified, a decision by the court on a dispositive motion (eg, summary judgment) or judgment in a bench trial will be binding on the class. A decision to deny class certification will not be binding on putative class members, although it will be persuasive authority for other courts to consider.

9 Remedies

9.1 What remedies are available in class actions in your jurisdiction?

The class action rules are a procedural device and do not provide remedies; nor may the class action rules be used to expand or modify a party's substantive rights. Therefore, a class member will be entitled to the same remedies as would be available to the plaintiff if the case were an individual action rather than a class action.

9.2 Are punitive damages awarded in your jurisdiction?

The availability of punitive damages depends on the legal claim being asserted in the case. Punitive damages are damages requested and/or awarded in a lawsuit when the defendant's wilful acts were malicious, violent, oppressive, fraudulent, wanton or grossly reckless. They are essentially designed to punish the defendant for its reckless or negligent behaviour. Many states have enacted statutes that limit and/or provide standards for the availability of punitive damages.

Also frequently asserted in consumer class action litigation are treble damages, which are technically a type of punitive damages. 'Treble damages' is a term that indicates that a statute exists to award a prevailing plaintiff up to three times actual or compensatory damages. The availability of treble damages will depend on:

• the applicable state statutes;
• the circumstances; and
• the cause of action at issue.

9.3 What factors will the courts consider in deciding on the quantum of damages?

In cases tried by a jury, the jury will decide on the quantum of damages based upon:

• the facts and circumstances of the case; and
• the jury instructions given in the case by the court.

Class action complaints seeking money damages almost always demand a trial by jury. Just as in non-class cases, the jury will be asked to return a verdict that compensates the class members for their economic losses based on the evidence presented at trial.

9.4 How are damages allocated among the members of the class?

Allocation of damages among class members will depend on the claims being made in the case on behalf of the class. Very often, a claims administrator will be retained to allocate to class members the damages awarded by a court or jury, or the proceeds of settlement fund, in accordance with the court's instructions or a settlement agreement.

For example, assume that a plaintiff filed a class action complaint asserting a violation of state consumer protection laws alleging a false advertising of a dietary supplement product that was purchased for $20. If the plaintiff's theory was that the product was worthless, the damages claim would be for $20 for every class member. If the jury returned a verdict in favour of the class, it could, depending on the proofs submitted, determine that total class-wide damages were equal to the number of sales of the product multiplied by $20. These damages would likely be allocated among the members of the class through a claims administration procedure, whereby class members would file a claim through a court-appointed claims administrator attesting to the number of purchases of the product.

10 Appeals

10.1 Can the court's decision in the class action be appealed? If so, on what grounds and what is the process for doing so?

Yes, the class action rules do not expand or modify a party's substantive rights, and thus decisions in class action lawsuits may be appealed in the same manner as other non-class cases. The final judgment at the end of a case can always be appealed; but most trial court orders before the final judgment cannot be appealed as of right – meaning that the party will need to ask the appellate court for permission to appeal because the order is not final (ie, it is interlocutory and the case is still proceeding).

An order granting or denying a motion for class certification is an interlocutory order because the case is still proceeding, and the class certification order can be altered or amended by the trial court before final judgment. In federal court, Rule 23(f) of the Federal Rules of Civil Procedure expressly allows the court of appeals to permit an appeal from an order granting or denying class action certification if the party files a petition for permission to appeal within 14 days of issue of the order. However, the federal courts of appeals have unfettered discretion to decide whether to consider the case immediately rather than after final judgment.

11 Costs and fees

11.1 What costs and fees are incurred when litigating in your jurisdiction? Can the winning party recover its costs?

The so-called 'American Rule' requires each party to bear its own attorneys' fees in litigation absent a statutory or contractual exception. However, some state and federal statutes allow for fee shifting.

In class actions, plaintiffs' attorneys are typically retained on a contingency-fee basis.

In contrast to a fixed hourly fee, a contingency fee provides for the attorneys to receive a percentage of the monetary amount that the plaintiffs receive if they win or settle the case. Attorneys' fees in a class action are typically paid out of the common settlement fund. If a case is settled, it is customary that the costs incurred by the class plaintiffs will be paid out of such a settlement fund. In a certified class action, the court may award reasonable attorneys' fees and non-taxable costs that are authorised by law or by the parties' agreement. A claim for an award must be made by motion; and a class member or a party from which payment is sought may object to the motion.

11.2 How are the costs and fees allocated among the members of the class?

If a case is settled, it is customary that the costs incurred by the class plaintiffs are paid out of a settlement fund. The costs are equally allocated among the members of the class or paid directly from the defendant's funds.

11.3 What happens if the claim of a class member is withdrawn before the proceedings have terminated?

It is not uncommon for class action complaints to assert multiple causes of action or claims for relief; and for various reasons, some claims may be withdrawn or dismissed. Whether or not the withdrawn claim can be resurrected by the named plaintiff or a putative class member later or in a separate legal proceeding will depend on how the litigation is ultimately resolved. In other words, a class-wide settlement or class judgment may effectively bar the ability of anyone to revive the withdrawn claim.

11.4 Do the courts manage costs during the proceedings?

The costs of litigation are managed by the parties and the courts typically do not become involved at all.

11.5 How do the courts assess the costs and fees at the end of the proceedings?

If the defendant prevails in a class action, there is typically no assessment of fees, since each party bears its own attorneys' fees in litigation absent a statutory or contractual exception.

If the class plaintiffs prevail, the courts will determine the amount of attorneys' fees to be awarded to the plaintiffs' attorneys, which will either be:

• recoverable from the damages awarded to the class; or
• separately assessed against the defendant if the case involves a fee-shifting statute.

In federal court, Rule 23(h) of the Federal Rule of Civil Procedure sets out the procedures for how a federal court must assess awarding costs and fees in a class action. A fee application must be presented to the court by a formal motion.

12 Funding

12.1 Is legal aid available for class actions in your jurisdiction? If so, what requirements and restrictions apply in this regard?

Free legal aid in civil actions is typically available only to help individuals to access basic necessities such as healthcare, housing, government benefits, employment and educational services, and not for class actions. Individuals who wish to institute a class action generally need no legal aid, since plaintiffs' class action lawyers are paid from the recovery they obtain for the benefit of the class.

12.2 Are contingency fees and similar arrangements permitted in your jurisdiction? If so, what requirements and restrictions apply in this regard?

Yes, class actions are almost always litigated on a contingency basis. Contingency-fee agreements are governed by each state's Court Rules and Rules of Professional Conduct. Federal courts have relied on two fundamental approaches when evaluating requests for attorneys' fees in class litigation:

• The 'percentage of recovery' approach determines the fee based on a percentage of the total recovery obtained by the class; and
• The 'lodestar' approach calculates the fee as the product of a reasonable hourly rate multiplied by the number of hours spent litigating the action.

Sometimes courts will combine these approaches to determine appropriate attorneys' fees.

12.3 Is third-party funding permitted in your jurisdiction? If so, what requirements and restrictions apply in this regard?

Third-party funding of litigation has become an increasingly big business, but it is not specifically regulated by federal law. Many federal courts have local rules or forms that require the disclosure of third-party funding arrangements in civil actions.

12.4 What are the specific implications of such various funding arrangements in class action proceedings?

Third-party funding of class litigation presents many of the same criticisms and implications of third-party funding of other civil litigation. When lawyers depend on funders to get paid in present or future cases, there may be pressure to let the funders have control over the litigation, which may undermine the interests of the plaintiffs and the class.

13 Trends and predictions

13.1 In which areas are class actions most commonly brought? Have there been any major cases of note in recent years?

Class actions are most commonly brought where large groups of individuals have suffered some economic loss – for example, consumer class actions involving the purchase, sale, advertisement or labelling of products. Likely the most notable major class action in recent years was the Volkswagen 'Clean Diesel' Marketing, Sales Practices, and Products Liability Litigation. The settlement in that case included a funding pool of:

• $10 billion for affected consumers of 2.0-litre diesel engine vehicles;
• $4.7 billion for environmental impact;
• an additional $1.2 billion for 3.0-litre vehicles; and
• a series of settlements on lessees and dealers.

This was the largest consumer auto industry class action settlement in US history.

13.2 How would you describe the current class action landscape and prevailing trends in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?

The class action landscape in the United States is active. Consumer class action lawsuits continue to flood the state and federal court dockets. Product sellers and manufacturers continue to be plagued by seemingly frivolous lawsuits over labelling and advertising. Technology and privacy concerns are at the forefront of emerging class actions, as companies in various industries have faced class actions due to cyberattacks, data breaches and website operations that implicate customer information.

14 Tips and traps

14.1 What would be your recommendations for the smooth progress of class actions in your jurisdiction and what potential pitfalls would you highlight?

The prosecution and defence of class actions would greatly benefit from better case management to allow cases to proceed more swiftly through the litigation process to trial. In jurisdictions where class actions are most prevalent, the courts have a backlog of cases – partly due to the COVID-19 pandemic – which creates delay and increases expenses for both sides. Further, frivolous claims burden an already overtaxed court system. Courts should be able to dismiss cases that are meritless and borderline frivolous without fear of reversal by appellate courts.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.