Ten Things Class Action Practitioners Need To Know About Potential Amendments To Federal Rule Of Civil Procedure 23

Rule 23 may be in for some major changes. The Advisory Committee has commissioned a Rule 23 subcommittee to investigate possible revisions to the class action rules. That subcommittee issued a report (pdf) discussing its progress, and recently has been conducting a "listening tour" of sorts regarding potential rule changes.

Our initial view is that the business community should have serious concerns about the approach that at least some members of the subcommittee appear to be taking, as several proposals are aimed at rolling back judicial decisions—including Supreme Court decisions—that are critical to ensuring that class actions satisfy the requirements of due process.

Here are ten things you need to know from the subcommittee's report.

1. Nothing is written in stone yet.

The report is avowedly tentative, declaring in boldface that "there is no assurance that the Subcommittee will ultimately recommend any amendments" to Rule 23. The report does identify some potential rule changes. But it describes them as "conceptual sketches of some possible amendments," not "initial drafts of actual rule change proposals." And the fact that a potential rule change isn't listed in the report doesn't mean that it's off the table either. The subcommittee says—again in boldface—that "it has not closed the door on other issues." In other words, the subcommittee's next report, which might follow the subcommittee's next meeting in September 2015, might cover very different content and have very different recommendations than this one.

2. Any changes wouldn't go into effect for several years.

The report indicates that if the Rule 23 subcommittee decides to propose any rule changes, drafts of those "possible amendments" would be presented to the Advisory Committee no sooner than its Fall 2015 meeting. Those drafts would then be discussed at the January 2016 meeting and given a final review no sooner than the Spring 2016 meeting. Assuming that the drafts are approved, they then would be presented to the standing committee as soon as summer 2016, with publication for public comment as early as August 2016. If the amendments are then formally adopted, the rule changes could go into effect "as soon as December 1, 2018."

3. The biggest change would be a huge—and worrisome—expansion of issue classes.

One of the most divisive issues in class-action practice today is whether courts may certify so-called "issue classes" under Rule 23(c)(4) to resolve issues on a class-wide basis even when the predominance requirement of Rule 23(b)(3) isn't satisfied for the claim as a whole. The Fifth Circuit largely bars such issue classes. Castano v. Am. Tobacco Co., 84 F.3d 734 (5th Cir. 1996). But the Third Circuit permits them under limited circumstances. Gates v. Rohm & Haas Co., 655 F.3d 255 (3d Cir. 2011). And a few other circuits have suggested that issue classes might be more generally permissible.

The problem with the free-wheeling use of issue classes is that it leads to class certification on demand. If predominance as to the claim as a whole doesn't matter, plaintiffs' counsel can keep severing individualized issues—effectively sweeping them under the rug—until the remaining common issues eventually predominate and the issue class can be certified. Putting aside the claims-splitting and Seventh Amendment problems that this procedure might pose, issue classes might seem more efficient in theory than separate adjudications. But in practice, it's often hard to try common issues effectively when they've been shorn of the individualized issues that put everything into context. And...