Shira Scheindlin (NYLJ/Rick Kopstein)
I recently spoke at a symposium sponsored by the Center on Civil Justice at the NYU School of Law to celebrate the 50th Anniversary of Rule 23. It was an outstanding program, highlighted with a memorable interview of Prof. Arthur Miller, the drafter of Rule 23 in 1966, conducted by Prof. Sam Issacharoff of NYU Law School. I participated on two panels. The first discussed class actions brought under Rule 23(b)(2), which is used when a class seeks only injunctive or declaratory relief. The second was a judges panel moderated by Professor Miller, in which he asked challenging questions of a panel of five judges, such as what would you change in Rule 23 if you could.
In preparing for the symposium, I reviewed all of the class action cases I handled during my years on the Southern District bench. The method for identifying the cases was unsophisticated. I ran Westlaw searches for opinions I issued that cited Rule 23. The exercise produced elementary statistical information that I found to be of interest and have concluded that this information might be of interest to those lawyers who toil, have toiled, or plan to toil in the class action arena. I do stress, however, that the numbers reported are not a result of a scientific analysis and should not be relied upon for any national projections.
Before presenting the data drawn from my cases, just a quick note explaining that I divided my presentation (and therefore this article) into two parts—the first dealing with (b)(2) classes and the second dealing with (b)(3). As a quick refresher, (b)(2) classes are those seeking final injunctive relief or corresponding declaratory relief.1 Actions falling under this section of Rule 23 generally address civil rights issues in many areas such as a denial of a constitutional right, voting rights, housing discrimination, school desegregation, challenges to statutes or regulations as discriminatory, or any other form of systemic discrimination. By contrast, a (b)(3) class seeks damages (as opposed to equitable relief) on behalf of class members and is prevalent in securities fraud, antitrust, employment discrimination, and consumer actions.2 Both (b)(2) and (b)(3) classes require that the putative class satisfy the four requirements set forth in Rule 23(a)—namely numerosity; commonality; typicality and adequacy of class representatives to protect the interests of the class.
From 1994 to 2016, I certified 15 (b)(2) classes—and denied certification in one—which amounts to approximately 1.5 such cases every two years. This, of course, is a minuscule part of the docket, although each of these cases takes a disproportionate amount of time for the trial judge supervising the case. Of the 16 cases, 14 can be considered “civil rights” cases, but two were not. One of the outliers involved a request for injunctive relief in an antitrust action involving sports broadcasting in which I certified a (b)(2) class but declined to certify a (b)(3) class.3 The other involved a class of employees who alleged that their employers failed to pay their salary, failed to remit withheld taxes to the state or city and failed to credit their pension accounts. I denied certification under (b)(2) on the ground that the class primarily sought money damages.4 I also denied a request to certify a (b)(3) class in that case on the ground that plaintiffs had failed to satisfy the requirements of numerosity and typicality.
In only two of the cases did a party seek a Rule 23(f) interlocutory review of the decision to certify (7.5 percent). In one, the Second Circuit declined to hear the appeal,5 but the appeal was taken in the other case.6 In that case, the Second Circuit affirmed in part and reversed in part. The court affirmed the certification of a plaintiff class but denied certification of a defendant class on the ground of lack of commonality. Only one of the 15 certified cases—Floyd v. City of New York—went to trial. Thirteen cases were settled—two as settlement classes. One case is still pending. Only two of the 15 cases (13 percent) presented contested attorney fees petitions.7 Fees have not yet been finalized in five of the cases.
I turn now to a brief description of each of the civil rights class actions. Four involved cases relating to stop and frisk practices including street stops, private building stops and public housing stops.8 The most well-known, Floyd v. City of New York—the only (b)(2) class in which a trial was held—was tried non-jury in Spring 2013 and resulted in a judgment against the City of New York. Eventually the City withdrew its appeal of the trial verdict—and also of a preliminary injunction in the related case of Ligon v. City of New York. Each of the four stop and frisk cases were settled on terms favorable to the plaintiff classes. A remedial process involving significant changes to police procedures is now in place overseen by Peter Zimroth, the court appointed monitor.
Three of the (b)(2) classes involved Medicaid recipients of home health care.9 Each of the suits, all filed as related, challenged the conditions of eligibility for such services and the process for terminating or reauthorizing these services on an annual basis. These cases both resulted in settlements favorable to the plaintiff class now requiring a written notice and a prompt hearing for any decrease in service or termination. Two other (b)(2) classes involved child care workers who challenged the delay in administrative hearings regarding allegations of potential child abuse, known as indicated reports, which remain on a central registry of child abuse and maltreatment, unless and until the report is successfully challenged.10 Both of these cases were settled on favorable terms to the plaintiff class. Nonetheless, listings on this central registry were recently in the news due to a large pro bono effort to represent people wrongfully included on the registry.11
Two other (b)(2) class actions were brought by persons who claimed false arrest and malicious prosecution in connection with arrests for the violation of an anti-loitering statute that had been declared unconstitutional at least a decade earlier.12 After certification was granted, defendants filed a 23(f) appeal, which was granted by the Second Circuit, which affirmed the plaintiff class but reversed the ruling permitting a state-wide defendant class.13 The case was eventually settled on terms favorable to the plaintiff class.
One case involved a class action by parolees against officials at the state’s Departments of Corrections and Parole, alleging that these officials subjected them to unlawful custody by continuing to impose terms of post-release supervision—a practice that had been declared unconstitutional years earlier by the Second Circuit.14 A (b)(3) damages class was also certified in this case. Eventually, I granted summary judgment to plaintiffs with respect to liability only. This decision was appealed and upheld.15 A trial on damages is pending.
One case involved a class action by prisoners held in solitary confinement in New York State challenging the conditions of their confinement.16 This case was the only one that sought the certification of a settlement class. I certified the class and approved the settlement reached by the plaintiffs and the State of New York.
The most recent (b)(2) class involved the certification of a class of parents of autistic children alleging violations of the Individuals with Disabilities Education Act (IDEA); the Rehabilitation Act of 1973, and various constitutional claims—all alleging that the children were not receiving the educational services to which they were entitled.17 The class was certified and the case is still pending.
I will now briefly summarize my experience with (b)(3) class actions. I have identified 29 requests to certify a class. This amounts to approximately three (b)(3) class actions every two years, nearly twice as many as (b)(2) filings. Of those, certification was granted approximately 75 percent of the time (22 out of 29 including approval of settlement classes),18 but denied seven times (including one settlement class).19 Six of the cases sought approval of a settlement class20—one of which was rejected as providing no benefit to the class.21 23(f) appeals were filed in eight of the 23 contested cases in which class certification was either granted (16 times) or denied (seven times) for a total of 35 percent of the time or nearly five times as often as in the (b)(2) cases.22 Six 23(f) appeals were filed in the 16 cases in which certification was granted following a contested motion (37 percent).23 Two of these requests were denied (33 percent).24 Of the remaining four, two were reversed,25 one resulted in a remand to reconsider in light of a change in the law (and was certified again),26 and one appeal is still pending.27 Two 23(f) appeals were taken from the seven cases in which certification was denied (28 percent). One request was denied and one request was heard and resulted in an affirmance of the decision to deny certification. Only one of the 29 cases was tried and resulted in a plaintiffs’ verdict. In only two of these cases were the attorney fees requested challenged by objectors (9 percent).28 In seven other cases, I wrote an opinion to explain either why I awarded the full amount of fees requested or less than the requested amount.29
Nearly 50 percent of the (b)(3) actions were brought under the securities laws.30 The remainder broke down as follows: (1) three environmental actions all arising in the multi district litigation concerning MTBE, an additive in gasoline alleged to have harmed groundwater;31 (2) three involving claims under the Fair Labor Standards Act and related claims under the New York Labor Law;32 (3) three involved financial claims—one under the Commodities Exchange Act;33 one under RICO,34 and one as a shareholders’ derivative action;35 (4) two ERISA actions;36 (5) one mass tort;37 and (6) one employment Title VII.38
To add a bit of context to the summary of my Rule 23 docket, I provide just a few national statistics regarding class action litigation in the federal courts. The Administrative Office of U.S. Courts has stopped reporting on the filing of class actions because it determined that the data it used was unreliable.39 The last year in which it did make such a report was the year ending Sept. 30, 2004. In that year the report showed that 2,693 class actions were filed nationwide of which 241 (9 percent) were categorized as “civil rights.”40 By searching civil cover sheets maintained by the Courthouse News Service, my office determined the number of class actions filed nationally from 2004 through 2015. That research revealed a steady upward trend, from 2,769 in 2004 to 9,754 in 2015.41 A 2016 report titled “Recent Trends in Securities Class Action Litigation: 2015 Full-Year Review” prepared by NERA Economic Consulting tracked federal filings of securities class actions from 1996 to 2015.42 The yearly average was 220 filings, with a low of 131 in 1996 (and again 132 in 2006) and a high of 274 in 2002, but most of the years showed steady filings hovering around the average.
This article does not purport to present reliable statistics. It is merely a snapshot of the information drawn from the docket of one judge sitting in the Southern District of New York from 1994 through the first half of 2016. When I prepared for the NYU symposium I reviewed this record and found it of interest. Others might also enjoy reflecting on what can be gleaned from this historical retrospective. Here are the lessons I drew. Class action litigation is alive and well. Actions brought under 23(b)(2) may be growing in frequency and may continue to grow as private enforcement replaces government enforcement in the years to come. Very few cases proceed to trial in either the (b)(2) or (b)(3) context. While some cases are dismissed on motion or on summary judgment, certification is frequently granted and rarely reversed. Most cases are settled. Attorney fee disputes are litigated far less often than one might think. Appeals pursuant to 23(f) are granted far more often in the (b)(3) context than in (b)(2) and many judges find that this appeal slows the momentum of a case and its eventual resolution. These are just my own observations. Because the use of class actions are often controversial, and the rule makers often consider changes to Rule 23, I offer these observations solely for what they are.
1. A (b)(2) class requires that “the party opposing the class has acted or refused to act on grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole …” Fed. R. Civ. P. 23(b)(2).
2. A (b)(3) class is one in which “questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controiversy.” Fed. R. Civ. P. 23(b)(3).
3. See Laumann v. National Hockey League, 105 F. Supp. 3d 384 (S.D.N.Y. 2015).
4. See Vengurlekar v. Silverline Techs., 220 F.R.D. 222 (S.D.N.Y. 2003).
5. See generally Floyd v. City of New York, 283 F.R.D. 153 (S.D.N.Y. 2012).
6. See generally Brown v. Kelly, 609 F.3d 467 (2d Cir. 2010).
7. Davis v. City of N.Y., No. 10 Civ. 699, 2011 WL 4946243 (S.D.N.Y. Oct. 18, 2011); Finch v. N.Y. State Office of Children & Family Servs., 861 F. Supp. 2d 145 (S.D.N.Y. 2012).
8. See generally Daniels v. City of New York, 198 F.R.D. 409 (S.D.N.Y. 2001); 199 F.R.D. 513 (S.D.N.Y. 2001); Floyd, 283 F.R.D. 153; Ligon v. City of New York, 288 F.R.D. 72 (S.D.N.Y. 2013); Davis v. City of New York, 296 F.R.D. 158 (S.D.N.Y. 2013).
9. See generally Rodriguez by Rodriguez v. Debuono, 177 F.R.D. 143 (S.D.N.Y. 1997), rev’d in part Rodriguez ex rel. Rodriguez v. DeBuono, 175 F.3d 227 (2d Cir. 1999); Mayer v. Wing, 922 F. Supp. 902 (S.D.N.Y. 1996), Strouchler v. Shah, 286 F.R.D. 244 (S.D.N.Y. 2012).
10. See generally Finch v. New York State Office of Children and Family Servs., 252 F.R.D. 192 (S.D.N.Y. 2008); Van Oss v. New York State Office of Children and Family Servs., No. 10 Civ. 7524, 2012 WL 2550959 (S.D.N.Y. July 2, 2012).
11. See Jeff Storey, “Pro Bono Lawyers Take on Registry of Child Abuse, Maltreatment,” New York Law Journal, Dec. 12, 2016; Jeff Storey, “Mom Who Used Son to Shoplift Was Wrongly Included on Child Abuse Registry Court Says,” New York Law Journal, Dec. 12, 2016 (citing In re Natasha W. v. New York State Office of Children and Family Servs, No. 100624/14, 2016 WL 6999574 (1st Dep’t Dec. 1, 2016)).
12. See generally Brown v. Kelly, 244 F.R.D. 222 (S.D.N.Y. 2007), aff’d in part, rev’d in part Brown v. Kelly, 609 F.3d 467 (2d Cir. 2010); Casale v. Kelly, 257 F.R.D. 396 (S.D.N.Y. 2009).
13. Brown v. Kelly, 609 F.3d 467 (2d Cir. 2010).
14. See generally Betances v. Fisher, 304 F.R.D. 416 (S.D.N.Y. 2015).
15. Betances v. Fischer, 837 F.3d 162, 164 (2d Cir. 2016).
16. See generally Peoples v. Annucci, 180 F. Supp. 3d 294 (S.D.N.Y. 2016).
17. See M.G. v. New York City Dep’t of Educ., 162 F. Supp. 3d 216 (S.D.N.Y. 2016).
18. In re Barrick Gold Sec. Litig., 314 F.R.D. 91 (S.D.N.Y. 2016); Strougo v. Barclays PLC, 312 F.R.D. 307 (S.D.N.Y. 2016); Carpenters Pension Trust Fund of St. Louis v. Barclays PLC, 310 F.R.D. 69 (S.D.N.Y. 2015); In re OSG Sec. Litig., No. 12-Civ. 07948, 2015 WL 10846119 (S.D.N.Y. Aug. 12, 2015); In re Longtop Fin. Techs. Ltd. Sec. Litig., No. 11 Civ. 3658, 2013 WL 3486990 (S.D.N.Y. July 11, 2013); In re Canadian Superior Sec. Litig., No. 09 Civ. 10087, 2011 WL 5830110 (S.D.N.Y. Nov. 16, 2011); Espinoza v. 953 Associates, 280 F.R.D. 113 (S.D.N.Y. 2011); In re Amaranth Nat. Gas Commodities Litig., 269 F.R.D. 366 (S.D.N.Y. 2010); Bd. of Trustees of the AFTRA Ret. Fund v. JPMorgan Chase Bank, N.A., 269 F.R.D. 340 (S.D.N.Y. 2010); In re Sadia, S.A. Sec. Litig., 269 F.R.D. 298 (S.D.N.Y. 2010); Fogarazzo v. Lehman Bros., 263 F.R.D. 90 (S.D.N.Y. 2009); Hall v. Children’s Place Retail Stores, 669 F. Supp. 2d 399 (S.D.N.Y. 2009); In re Methyl Tertiary Butyl Ether (MTBE) Prod. Liab. Litig., 241 F.R.D. 185 (S.D.N.Y. 2007); In re Methyl Tertiary Butyl Ether (MTBE) Prod. Liab. Litig., 241 F.R.D. 435 (S.D.N.Y. 2007); In re Citigroup Pension Plan ERISA Litig., 241 F.R.D. 172 (S.D.N.Y. 2006); Velez v. Majik Cleaning Serv., No. 03 Civ. 8698, 2005 WL 106895 (S.D.N.Y. Jan. 19, 2005); Denney v. Jenkens & Gilchrist, 230 F.R.D. 317 (S.D.N.Y. 2005); Noble v. 93 Univ. Place, 224 F.R.D. 330 (S.D.N.Y. 2004); In re Initial Pub. Offering Sec. Litig., 227 F.R.D. 65 (S.D.N.Y. 2004); In re Initial Pub. Offering Sec. Litig., 671 F. Supp. 2d 467 (S.D.N.Y. 2009); In re Ski Train Fire in Kaprun, Austria on Nov. 11, 2000, 220 F.R.D. 195 (S.D.N.Y. 2003); In re Indep. Energy Holdings PLC Sec. Litig., 210 F.R.D. 476 (S.D.N.Y. 2002); Milman v. Box Hill Sys., 192 F.R.D. 105 (S.D.N.Y. 2000).
19. Wynn v. N.Y. City Hous. Auth., 314 F.R.D. 122 (S.D.N.Y. 2016); Abu Dhabi Commercial Bank v. Morgan Stanley & Co., 269 F.R.D. 252 (S.D.N.Y. 2010); Carfagno ex rel. Centerline Holding Co. v. Schnitzer, 591 F. Supp. 2d 630 (S.D.N.Y. 2008); In re Methyl Tertiary Butyl Ether (“MTBE”) Prod. Liab. Litig., 209 F.R.D. 323 (S.D.N.Y. 2002); Teamsters Local 445 Freight Div. Pension Fund v. Bombardier, No. 05 Civ. 1898, 2006 WL 2161887 (S.D.N.Y. Aug. 1, 2006); Dunnigan v. Metro. Life Ins. Co., 214 F.R.D. 125 (S.D.N.Y. 2003); Polar Int’l Brokerage v. Reeve, 187 F.R.D. 108 (S.D.N.Y. 1999) (denying certification of a proposed settlement class).
20. In re OSG Sec. Litig., 2015 WL 10846119; In re Canadian Superior Sec. Litig., 2011 WL 5830110; Denney, 230 F.R.D. 317; Hall, 669 F. Supp. 2d 399; In re Initial Pub. Offering Sec. Litig., 671 F. Supp. 2d 467; Polar, 187 F.R.D. 108.
21. Polar, 187 F.R.D. 108.
22. Strougo, 312 F.R.D. 307; In re Sadia, S.A. Sec. Litig., 269 F.R.D. 298; Fogarazzo, 263 F.R.D. 90; In re Citigroup, 241 F.R.D. 172; In re Initial Pub. Offering Sec. Litig., 671 F. Supp. 2d 467; In re Ski Train, 220 F.R.D. 195; Teamsters, 2006 WL 2161887; Abu Dhabi Commercial Bank, 269 F.R.D. 252.
23. Strougo, 312 F.R.D. 307; In re Sadia, S.A. Sec. Litig., 269 F.R.D. 298; Fogarazzo, 263 F.R.D. 90; In re Citigroup, 241 F.R.D. 172; In re Initial Pub. Offering Sec. Litig., 671 F. Supp. 2d 467; In re Ski Train, 220 F.R.D. 195.
24. In re Sadia, S.A. Sec. Litig., 269 F.R.D. 298; In re Citigroup, 241 F.R.D. 172.
25. In re Initial Pub. Offering Sec. Litig., 671 F. Supp. 2d 467; In re Ski Train, 220 F.R.D. 195.
26. Fogarazzo, 263 F.R.D. 90.
27. Strougo, 312 F.R.D. 307.
28. In re Initial Pub. Offering Sec. Litig., 671 F. Supp. 2d 467 (S.D.N.Y. 2009); In re Indep. Energy Holdings PLC, No. 00 Civ. 6689, 2003 WL 22244676 (S.D.N.Y. Sept. 29, 2003).
29. In re Amaranth Nat. Gas Commodities Litig., No. 07 Civ. 6377, 2012 WL 2149094 (S.D.N.Y. June 11, 2012); Bd. of Trustees of AFTRA Ret. Fund v. JPMorgan Chase Bank, N.A., No. 09 Civ. 686, 2012 WL 2064907 (S.D.N.Y. June 7, 2012); In re Sadia S.A. Sec. Litig., No. 08 Civ. 9528, 2011 WL 6825235 (S.D.N.Y. Dec. 28, 2011); Fogarazzo v. Lehman Bros., No. 03 Civ. 5194, 2011 WL 671745 (S.D.N.Y. Feb. 23, 2011); In re Canadian Superior Sec. Litig., No. 09 Civ. 10087, 2011 WL 5830110 (S.D.N.Y. Nov. 16, 2011); Denney v. Jenkens & Gilchrist, 230 F.R.D. 317 (S.D.N.Y. 2005), aff’d in part, vacated in part, remanded sub nom. Denney v. Deutsche Bank AG, 443 F.3d 253 (2d Cir. 2006); Hall v. Children’s Place Retail Stores, 669 F. Supp. 2d 399 (S.D.N.Y. 2009).
30. In re Barrick Gold Sec. Litig., 314 F.R.D. 91; Strougo, 312 F.R.D. 307; Carpenters, 310 F.R.D. 69; In re OSG Sec. Litig., 2015 WL 10846119; In re Longtop Fin. Techs. Ltd. Sec. Litig., 2013 WL 3486990; In re Canadian Superior Sec. Litig., 2011 WL 5830110; Abu Dhabi Commercial Bank, 269 F.R.D. 252; Bd. of Trustees of the AFTRA Ret. Fund, 269 F.R.D. 340; In re Sadia, S.A. Sec. Litig., 269 F.R.D. 298; Fogarazzo, 263 F.R.D. 90; Hall, 669 F. Supp. 2d 399; Teamsters, 2006 WL 2161887; In re Initial Pub. Offering Sec. Litig., 227 F.R.D. 65; In re Indep. Energy Holdings PLC Sec. Litig., 210 F.R.D. 476; Milman, 192 F.R.D. 105; Polar, 187 F.R.D. 108.
31. In re MTBE Prod. Liab. Litig., 241 F.R.D. 435; In re MTBE Prod. Liab. Litig., 241 F.R.D. 185; In re MTBE Prod. Liab. Litig., 209 F.R.D. 323.
32. Velez, 2005 WL 106895; Denney, 230 F.R.D. 317; Noble, 224 F.R.D. 330.
33. In re Amaranth Nat. Gas Commodities Litig., 269 F.R.D. 366.
34. Denney, 230 F.R.D. 317.
35. Carfagno, 591 F. Supp. 2d 630.
36. In re Citigroup, 241 F.R.D. 172; Dunnigan, 214 F.R.D. 125.
37. In re Ski Train, 220 F.R.D. 195.
38. Wynn, 314 F.R.D. 122.
39. Kenneth Jost, “Will the Supreme Court Approve the Wal-Mart Case?,” 21 CQ RESEARCHER 19 (2011), available at http://library.cqpress.com/cqresearcher/document.php?id=cqresrre2011051300.
40. Administrative Office of the U.S. Courts, Judicial Business 2004, table X-5, available at http://www.uscourts.gov/statistics-reports/judicial-business-2004.
41. The figures for each year are: 2004: 2,769; 2005: 3,484; 2006: 4,227; 2007: 5,964; 2008: 6,039; 2009: 6,061; 2010: 6,409; 2011: 6,681; 2012: 6,781; 2013: 6,622; 2014: 7,504; 2015: 9,754.
42. Svetlana Starykh and Stefan Boettrich, “Recent Trends in Securities Class Action Litigation: 2015 Full-Year Review,” NERA, Jan. 25, 2016, at 2, available at http://www.nera.com/content/dam/nera/publications/2016/2015_Securities_Trends_Report_NERA.pdf.