USA Law and Practice Contributed by: Roger Cooper and Lina Bensman, Cleary Gottlieb Steen & Hamilton
2. Legal Framework 2.1 Collective Redress and Class Action Legislation Class actions that proceed in United States federal courts are governed by Rule 23, which sets forth the threshold requirements and procedures for bringing a class action, as well as the framework for appeals of class certification decisions, appointment of class counsel, and other facets of class action litigation. Most state laws mirror Rule 23, whether through a parallel state statute or through state common law. In particular, Rule 23 sets forth the basic requirements that a suit must meet in order to proceed as a class action, as well as the procedures for certifying a class and conducting the class action once those require- ments have been met. Rule 23 also provides the basic legal structure for assessing proposed settlements, voluntary dismissals, and compromises with respect to ongoing class actions, as well as appeals or certi- fication decisions, the appointment of class counsel, and motions for attorneys’ fees. Class actions under this regime generally reflect an opt-out model, under which class members must affirmatively opt out of participation in the suit in order to avoid being bound by the judgment. Prospective class members routinely exercise this right, for example, by providing written notice memorialising this decision. Although Rule 23 sets forth the core framework within which class actions are brought, many further federal and state statutes shape the nature and progression of class actions; over time, this legislation has been enacted towards the end of further articulating and adjusting this general structure, often with the aim of curbing what some view as the excesses of class actions in the United States. Some of these statutes are concerned with class actions as a general mat- ter. For example, the 2005 Class Action Fairness Act was a programmatic legislative intervention aimed at managing the number and character of class actions permitted to proceed in federal court. Numerous other statutes address narrower and more targeted aspects of class actions. For example, the 1995 Private Securi- ties Litigation Reform Act governs certain elements of securities fraud claims brought as class actions, such as the process for selecting a lead plaintiff, govern- ing pleading standards, and the calculation of dam-
2005 the United States Congress enacted the Class Action Fairness Act (CAFA), which made federal courts more available to litigants pursuing class actions as a means of ensuring that disputes affecting the citi- zens of multiple states are resolved within the federal system (and, in the view of certain observers, reining in state adjudicators who favoured class action plain- tiffs). (Kristen L. Wenger, “The Class Action Fairness Act of 2005: The Limits of Its Text and the Need for Legislative Clarification, Not Judicial Interpretation”, 38 Fla. St. U. L. Rev. 679, 689–90 (2011).) 1.2 Basis for the Legislative Regime, Including Analogous International Laws While the body of United States law governing class actions has developed independently for nearly 250 years, it has its origins in the framework provided by English common law. The early 21st century has seen a parallel rise in robust multi-claimant litigation regimes internation- ally, particularly in Europe and Latin America, which are largely modelled on the common law class actions that have evolved in the United Kingdom and United States over the last several centuries. (Mark A. Beh- rens et al, “Global Litigation Trends”, 17 Mich. St. J. Int’l L. 165, 167–68 (2009).) While these younger systems of representative adjudication continue to develop, at present they remain less robust than their Anglo-American analogues; some commenta- tors have suggested that their gradual development is animated, at least in part, by an interest in avoid- ing the frivolity and predation sometimes associat- ed with United States class actions. (Jason Rathod and Sandeep Vaheesan, “The Arc and Architecture of Private Enforcement Regimes in the United States and Europe: A View Across the Atlantic”, 14 U.N.H.L. Rev. 303, 353 (2016).) For example, in contrast with many European regimes, United States class actions are unrestricted as to subject matter, may be brought by a private individual, and may seek a broad range of remedies (including substantial statutory punitive damages under certain circumstances). 1.3 Implementation of the EU Collective Redress Regime Not applicable to the United States of America.
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