United States
A putative class action proceeding may be commenced by a named plaintiff as a representative of unnamed parties who have the same interest in the proceeding. Any class action in which total exposure exceeds USD5 million may be brought in federal court if the defendant and at least one of the class members are citizens of different states.
The named plaintiff (or class representative) must seek leave of the court to certify the class and proceed as a class action. To obtain class certification, the class representative must produce evidence of a sufficiently numerous class and demonstrate that common legal issues are shared on a class-wide basis, such that resolution of those issues would materially advance all members’ claims. Class members are not required to demonstrate identical claims or damages but must show sufficient commonality across the class that individual issues will not make a class proceeding unwieldy. Typically, a motion to certify a class is made following a period of discovery devoted to class issues, such as identification of the class members, common issues, and shared damages theories. An appeal of a class certification decision may be taken if permitted by the appellate court.
As a practical matter, most class actions in the United States are brought with the expectation of settlement. Common claims for class treatment include consumer protection, antitrust, securities actions, mass tort, and civil rights matters, in which individual damages are typically small (perhaps as little as a few dollars) but, in the aggregate, create significant liability exposure. Moreover, while individual class members may recover only small amounts, class counsel may end up recovering a large award of attorney’s fees. In any event, class actions typically proceed up until the class certification stage, at which point they are often dismissed or settled.
Once a class is certified, all individuals who satisfy the class definition become members of the class. Those individuals must be notified of their status as class members and given the opportunity to opt out of the class proceedings, or to object to any settlement. All class members who do not opt out will be bound by the judgment of the court or by any approved settlement.
Notable State Variations
- California: A denial of class certification is immediately appealable as a matter of right; and
- Texas: Orders granting or denying class certification are immediately appealable as a matter of right.