RULES SUGGESTION

to the

ADVISORY COMMITTEE ON CIVIL RULES

A SUPERIOR DEFINITION OF SUPERIORITY: REMOVING RULE 23(b)(3)’S BAN

AGAINST CONSIDERING NON-LITIGATION SOLUTIONS WHEN DECIDING

WHETHER A CLASS ACTION IS “SUPERIOR TO OTHER AVAILABLE METHODS”

September 2, 2022

Lawyers for Civil Justice (“LCJ”)

help ensure that “a class action would achieve economies of time, effort, and expense, and

promote uniformity of decision as to persons similarly situated, without sacrificing procedural

fairness or bringing about other undesirable results.”

frequently fails to serve this purpose—and even thwarts it—because the word “adjudicating” is

often interpreted to prohibit courts from weighing a class action against non-litigation “other

available methods” that provide quick and effective redress to putative class members—such as

refunds, warranties, customer care programs, remediation, private claim resolution, and consent

judgments. Ignoring these options can lead courts to certify class actions that not only fail to

organizations that promotes excellence and fairness in the civil justice system to secure the just, speedy, and

inexpensive determination of civil cases. For over 35 years, LCJ has been closely engaged in reforming federal

procedural rules in order to: (1) promote balance and fairness in the civil justice system; (2) reduce costs and

burdens associated with litigation; and (3) advance predictability and efficiency in litigation.

Fed. R. Civ. P. 23(b)(3) (emphasis added). A court also must find that the requirements of Rule 23(a) are satisfied

Fed. R. Civ. P. 23, 1966 Committee Note.

22-CV-L

determination of whether a particular class action is in fact “superior to other available methods.”

Some courts are resorting to rule gymnastics to conduct this analysis under Rule 32(a)(4)’s

“adequacy” requirement, but this approach should not be necessary. The Committee should

amend Rule 23(b)(3) to include consideration of all “other available methods”—whether in or

out of court—for resolving the potential class claims as part of determining superiority. A

suggested amendment is attached.

II. RULE 23(b)(3) AND THE COMMITTEE NOTES ARE WIDELY INTERPRETED

TO PRECLUDE COURTS FROM CONSIDERING NON-LITIGATION

REMEDIES WHEN DETERMINING WHETHER CLASS LITIGATION IS

“SUPERIOR TO OTHER AVAILABLE METHODS”—SPURRING A CALL TO

involving a defective toy—the Seventh Circuit held that the language of Rule 23(b)(3) did not

permit the District Court to compare the defendant’s voluntary recall and refund program to the

class action litigation device. While stating that he had no “quarrel with the district court’s

objective” of avoiding duplicative litigation, Judge Easterbrook wrote that the participants in the

rulemaking process—including the Committee—did not use the word adjudication “loosely to

mean all ways to redress injuries,” but rather drafted Rule 23(b)(3) “with the legal understanding

of ‘adjudication’ in mind: the subsection poses the question whether a single suit would handle

the dispute better than multiple suits.”

In other words, because the defendant’s voluntary recall

and refund program did not involve or result from an “adjudication” by a court, it could not be

whether one suit is preferable to several,” and that “the rule was not intended to weigh the

superiority of a class action against possible administrative relief.... We find no suggestion in the

language of Rule 23, or in the committee notes, that the value of a class suit as a superior form of

action was to be weighed against the advantages of an administrative remedy.”

In re Aqua Dots Prods. Liab. Litig., 654 F.3d 748 (2011).

Id. at 751-52.

drafted with the legal understanding of adjudication in mind: the subsection poses the question whether a single suit

reimbursement program as an “adjudication”); Martin v. Monsanto Co., No. EDCV162168JFW(SPx), 2017 WL

1115167, at *9 (C.D. Cal. Mar. 24, 2017) (“pursuant to the plain language of Fed. R. Civ. P. 23(b)(3), ‘[t]he analysis

is whether the class action format is superior to other methods of adjudication, not whether a class action is superior

The constraints of this common interpretation of Rule 23(b)(3) have created such “uneasiness”

that at least one court has raised a “call to the Rulemakers.” In In re Hannaford Brothers Co.

the court understood that the defendant had already

reimbursed its customers for the cost of replacing their credit cards after a data theft incident,

and noted the defendant’s view that its program “afford[s] class members a comparable or even

[As] much as I too favor parties being able to resolve their controversies without

expensive litigation, I observe that Rule 23(b)(3) does not address superiority as a

matter of abstract economic choice analysis, but asks if a class action is “superior

program to satisfy aggrieved customers, but [ ] the Hannaford program is not

relevant to my superiority determination under the class certification decision.

In arriving at this conclusion, the Court noted that the language of the Rule compelled an outcome

that failed to fulfill the policy goals of Rule 23.

[T]he recovery of generous fees for plaintiffs’ attorneys and large cy pres awards

with little money going to actual class members call[s] into question the integrity

of the class action process for resolving lawsuits.

to an out-of-court, private settlement program’”) (quoting Turner v. Murphy Oil USA, Inc., 234 F.R.D. 597, 610

(same); Dean v. Colgate-Palmolive Co., No. EDCV 15-00107 JGB, 2018 WL 6265003, at *10 (C.D Cal. Mar. 8,

2018) (in “close issue,” finding superiority despite preexisting corporate return policy because definition of

refund program because refund was not “adjudication”); Melgar v. Zicam LLC, No. 2:14-CV-00160-MCE-AC, 2016

does not comport with the plain language of Rule 23”); In re Scotts EZ Seed Litig., 304 F.R.D. 397, 415 (S.D.N.Y.

2015) (“[a]s an initial matter, the Court is not convinced non-adjudicative forms of redress may even be considered

Id. at 34.

Id.

Id. at 34-35.

[M]y concern here that this is a de minimis class action where virtually no one will

bother to make a claim and that any recovery will serve solely the lawyers (and

perhaps some modest measure of corporate deterrence) present[s] questions for

those who write the class action rules and for Congress, not for this individual

judge applying the language of the Rule.

* * *

Although reasonable people can certainly maintain that as a matter of policy other

solutions are preferable to litigation, I do not see how that argument has a place in

the class certification decision under the current Rule.

Id. at 26, 29, 34–35 (emphasis added).

Outside of Rule 23, courts have recognized at least one method of out-of-court resolution—arbitration— as

Fed. R. Civ. P. 23, 1966 Committee Note (emphasis added).

Id. (emphasis added).

to determine whether Rule 23 is sufficiently effective to justify the expenditure of

the judicial time and energy that is necessary to adjudicate a class action and to

assume the risk of prejudice to the rights of those who are not directly before the

court.

“adjudication” language in Rule 23(b)(3) undermines the Rule’s purpose of avoiding prejudice to

class members.

III. RULE 23(B)(3), AS CURRENTLY WRITTEN, IS PREVENTING JUDGES FROM

FULFILLING THEIR DUTY TO PROTECT THE CLASS BY LIMITING

CONSIDERATION OF “OTHER AVAILABLE METHODS” ONLY TO IN-

Rule 23 gives judges a broad responsibility to ensure fairness to class members. As the

Committee Notes explain, the core of that duty is ensuring that the action delivers a meaningful

result for class members, including when a court reviews a proposed settlement (“[t]he relief that

the settlement is expected to provide to class members is a central concern”

determines attorneys’ fees (“[o]ne fundamental focus is the result actually achieved for class

members, a basic consideration in any case in which fees are sought on the basis of a benefit

achieved for class members”

arguably even more so given the high stakes of the certification decision.

California Attorney General and Real Estate Commissioner had already reached settlement in state court requiring

(7) Defending a class action would prove costly to the defendants and duplicate in part the work expended over a

that the class action was not a superior method of resolving the controversy.)”

Fed. R. Civ. P. 23, 2018 Committee Note.

Fed. R. Civ. P. 23, 2003 Committee Note.

Once a class action is certified, it almost always settles. See Richard A. Nagareda, Embedded Aggregation in

651, 685 (9th Cir. 2022) (en banc) (Lee, J., dissenting) (“If trials these days are rare, class action trials are almost

137 S. Ct. 1702 (2017); accord AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 350 (2011) (noting the “risk of

‘in terrorem’ settlements that class actions entail”).

Many courts have recognized that their responsibility to class members includes protecting them

from class actions that add little if any value—or even cause them harm.

This is especially true

when available non-adjudicative remedies already provide class members with full and timely

redress, and where litigation would delay recovery, impose significant court costs and attorneys’

fees, and consume judicial resources. As one court put it, class members, if asked, “would not

and now.”

Cases driven by attorneys’ fees frequently fall in this category of no-value-added cases that harm

rather than help class members. For example, in Conrad v. Boiron, Inc.

—a consumer fraud

case arising out of a homeopathic flu remedy where a refund was already available and label

changes were already made—the court emphasized that “it is hard to see how the proposed class

plaintiffs’ counsel have encouraged their clients to not obtain repairs under their warranties, to forego relief

program in order to bring class action).

Pagan v. Abbott Labs., Inc., 287 F.R.D. 139, 151 (E.D.N.Y. 2012).

86 F.3d 536 (7th Cir. 2017).

832 F.3d 718, 724 (7th Cir. 2016).

See, e.g., Briseno v. Henderson, 998 F.3d. 1014, 1019, 1023 (9th Cir. 2021) (cautioning against approving

of unfairness, and [] the current record does not adequately dispel the possibility that class counsel bargained away a

benefit to the class in exchange for their own interests”).

cases, and should not feel compelled by the Rules to certify them without understanding the class

members’ full panoply of options for resolution and remedy.

Of course, attorneys’ fees are not the only costs of class actions.

decision on the merits is ever made—require notice and administration, which can cost hundreds

and due process, they are unnecessary and therefore harmful when the class members already

have a remedy outside of litigation. For example, in Aqua Dots, the putative class action

involved an allegedly defective toy kit already subject to a broad recall and refund program. The

Seventh Circuit observed that the class “[n]otice may well cost more, per kit, than the kits’ retail

price—and could be ineffectual at any price, since most purchases were anonymous.”

The

Court reasoned that, especially where a recall, refund, or reimbursement program has already

See In re Aqua Dots, 654 F.3d at 751 (“The transactions costs of a class action include not only lawyers’ fees but

2002) (“Regulation by the NHTSA, coupled with tort litigation by persons suffering physical injury, is far superior

to a suit by millions of uninjured buyers for dealing with consumer products that are said to be failure-prone.”).

Id.

IV. FREQUENTLY, NON-JUDICIAL REMEDIES ARE AVAILABLE THAT

PROVIDE FASTER, MORE COMPLETE RELIEF THAN THE PROPOSED

software patches or updates, and private claim resolution. These programs provide timely and

efficient remedies directly to the customer. Automatic software updates provide quicker relief to

impacted consumers than protracted litigation, and recall programs do not require potentially

For government-supervised relief, there are concerns about “duplicat[ing] the[] efforts” of the government agency.

See, e.g., In re Family Dollar Stores, Inc., Pest Infestation Litig., MDL No. 3032, 2022 WL 2129050, at *1

(J.P.M.L. June 2, 2022) (consolidating class actions filed in wake of FDA recall); Coffelt v. Kroger Co., No. EDCV

16-1471 JGB (KKx), 2017 WL 10543343, at *2 (C.D. Cal. Jan. 27, 2017) (class action alleging overpayment for

lawsuits-filed-against-kb-home-in-orlando/ (11/2017 discussion of raising same claims).

lawsuit-investigation/

Non-“adjudication” alternatives often expedite remedies to class members while saving

considerable transaction costs, including attorneys’ fees. Allowing judicial consideration of

voluntary remedies at the certification stage places the incentives where they should be: on

encouraging relief to class members in the quickest, most cost-effective and robust way.

DEMONSTRATED BY LOW PARTICIPATION RATES IN CLASS ACTION

Objective evidence—consumer participation rates in class action settlements—demonstrates that

class actions are often not the superior mechanism for delivering relief from an alleged injury.

given very large attorneys’ fee awards even when class members receive little to no monetary

recovery; and (iii) in claims-made settlements, class members as a whole receive on average only

23 percent of the settlement amount, with the remainder being consumed by attorneys’ fees,

expenses, or cy pres distributions….”

Jones Day found that “the average participation rate in

such settlements was only 4.91 percent and the median participation rate was only 3.90 percent”

among settlements in which class members were required to submit a claim form, with only two

cases with a claim rate of higher than 15 percent.

The Federal Trade Commission’s data on claims rates is similar. In 2019, the FTC published a

Paper”), https://www.jonesday.com/en/insights/2020/04/empirical-analysis-consumer-fraud-class-action.

A total of 141 settlements were reviewed as an initial data set across the two White Papers, out of which 60

2020 Jones Day White Paper at Cover page. The 2021 Jones Day White Paper Update reported that for

(Sept. 2019) (“FTC Notice Study”), https://www.ftc.gov/system/files/documents/reports/consumers-class-

Id. at 27. While the FTC ultimately made various recommendations to improve notice understandability and

notices with skepticism.” Id.at 2.