Rule 23(b)(3) Superiority Problems: Proceeding With Both a Class Action and Individual Suits

Overview: The superiority requirement of Fed. R. Civ. P. 23 mandates that a (b)(3) class action be "superior to other available methods for the fair and efficient adjudication" of the particular controversy at issue. One factor a court should consider in its superiority analysis is the manageability of proceeding with a class action. While defending a securities fraud class action, Jones Day recently faced an interesting superiority issue: whether problems that prohibit class certification of certain claims in an action may prevent a court from properly certifying any remaining claims because of manageability concerns. The article asserts that securities fraud plaintiffs commonly plead the "kitchen sink" of claims under the Securities Act of 1933 and the Securities Exchange Act of 1934. Certain of these claims often require showings of individualized proof (e.g., proof of reliance in a Section 10(b) claim where no presumption of reliance exists) that would defeat Rule 23(b)(3)'s predominance requirement -- and therefore class certification -- as to those claims. This piece further states that the import of the Madison Partnership decision is that, when circumstances require that certain claims may be tried only through individual actions, proceeding with a class action on remaining claims may not be the superior method of adjudication, particularly when the various claims involve similar elements and require similar findings of fact.

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Format: HTML | Date: Sep 2001 | Pages: 1