Cohelan on California Class Actions

Timothy D. Cohelan
Cohelan & Khoury, San Diego, California

[A] In General
The primary advantage of a class action is that it effectively and efficiently brings together small claims unlikely or impractical to litigate individually. By aggregating small claims, class actions lower the cost of litigation and bring superior resources and legal talent to bear.

Additionally, a certified class action strengthens the plaintiff's negotiating position. A certified class action levels the playing field when individuals of little power find themselves up against strong economic entities.

The leading disadvantage is the procedural complexity of class actions. From the plaintiff's perspective, class actions can be expensive to prosecute and defend. Additionally, class actions need to be resolved in a common manner that precludes attention to the idiosyncratic nature of individual claims. Class actions usually become a liability in certain types of emotional distress, negligence, or other issues. Absent certification, the practitioner is left with the need and duty to prosecute the case on a far narrower scope than originally anticipated.

In extensive class actions, consolidation of cases and assignment of lead counsel to different individuals eliminates direct litigation control. Also, large consolidated cases necessarily proceed slowly and sharply restrict settlement.

Class actions are generally, but not necessarily, more time consuming and expensive for practitioners. Unlike individual litigation, class actions must undergo a series of precertification steps that increases counsel's burden of time and expense.

[B] Advantages and Disadvantages of Federal Class Actions
Federal class actions offer the considerable advantage of remedying wrongs on behalf of litigants located in any number of states. If two or more cases involving a similar defendant or common liability questions are pending in different districts, defendant or plaintiff may ask to have them transferred under the auspices of the Multidistrict Litigation Panel in federal law. (28 U.S.C.A. § 1407.) This jurisdictional benefit can greatly streamline consolidation of similar cases. It should be noted that California has a similar capability; the Judicial Council can coordinate similar cases pending in different superior courts. (See CCP §§ 404 et seq.; Cal. Rules of Court, Rule 1501 et seq.)

The well-defined federal procedural rules in effect since July 1, 1966 also work to counsel's benefit. Additionally, certain substantive causes of action can be heard only in federal courts, such as federal antitrust claims or certain environmental matters.

The federal court system works to the benefit of a class action because one judge handles the entire proceeding. Assignment to an individual judge allows the same jurist to rule on class certification after dealing with extensive pretrial motions and other activity that has "educated" him or her to the benefit or merits of the case.

Local venue is less likely in large class actions because of the use of the Multidistrict Litigation Panel. Federal forums are also subject to jurisdictional restrictions. The U.S. Supreme Court has held, for instance, that each of the class members in a diversity case under federal rule 23 must have a monetary claim of more than $10,000 and or be dismissed from the case. (Zahn v. International Paper, 414 U.S. 291, 94 S.Ct. 505, 38 L.Ed.2d 511 (1973), superseded by statute as stated in Ansoumana v. Gristeded's Operating, Corp., 201 F.R.D. 81 (D.N.Y.2001).) This issue does not, however, apply in most securities class actions, which are usually brought under the jurisdictional provisions of federal securities law.

Also, most authorities believe that federal rules require stricter adherence to notice provisions than California state practice does. The federal rules are set forth in Eisen v. Carlisle and Jacquelin, 417 U.S. 156, 94 S.Ct. 2140, 40 L.Ed.2d 732 (1974). The state rules appear in Cartt v. Superior Court of Los Angeles County, 50 Cal.App.3d 960, 124 Cal.Rptr. 376 (2d Dist.1975).

[C] Advantages and Disadvantages of State Class Actions
Once counsel understands the rules of class action, the California courts provide a more direct and expeditious venue than the federal. While this primarily benefits cases whose class members are mostly California residents, national class actions can be venued in a California court in some instances. California substantive law can be applied in areas where federal law is less favorable, such as securities violations or indirect purchaser requirements in antitrust law. Additionally, recent United States Supreme Court rulings boost respect for state class action settlements and make them more attractive (Matsushita Electric Industrial Co., Ltd v. Epstein, 516 U.S 367, 116 S.Ct. 873, 134 L.Ed.2d 6 (1996); see discussion in Chapter 4.)

The leading disadvantage to state class actions is the inability to venue larger national claims without raising serious due process issues. In addition, a number of superior courts, including smaller courts, face serious pressures because of criminal calendars swollen by "three strikes" criminal laws. Judges who are busy and overburdened are likely to find it difficult to handle the extensive factual investigation class action demands and to constantly monitor the conduct of plaintiff and defense counsel for potential harm to absent class members. Class actions require a great deal more work than the average civil case, and they fare best with judges who are seriously interested in them and willing to bear the extra workload.

Copyright © 2001 West Group