Fri, May 25, 2018

What is Rule 23?

A guide to Rule 23 for new class action practitioners and class members 

Federal Rule 23 was created to govern class action lawsuits and settlements and in part to allow class members to opt-out of a class action lawsuit, instead of opt-in. The rule dictates when a class can be certified, what type of notice if any is required to class members if certified, and what procedures and processes must be adhered to with class certification. 

Prerequisites and Types of Class Actions

To avoid potentially frivolous class action lawsuits and to protect class members rights, Rule 23 provides structure to the process once the court determines whether a lawsuit can be considered a class action. The rule also provides guidance to counsel and settlement administrators, outlining specific steps necessary to move through a class action litigation or settlement process especially with regards to notifying the class.  

A lawsuit may be certified as a class action if it satisfies Rule 23(a), which states that a class can be certified only if it represents a large group of people with similar or the same injuries or damages, or typical defenses resulting from an action by the defendant. It also requires that counsel for the class be able to fairly and adequately protect and represent the interests of the class. 

There are two main types of relief sought in class actions: 

  • Injunctive relief: This is often referred to as Rule 23(b)(2) suits, where the outcome sought is that the defendant changes a behavior or practice and an injunction order from the court is the final remedy. 
  • Class actions seeking some type of equitable or monetary compensation most commonly under Rule 23(b)(3) but can also be brought under Rule 23(b)(1).  As one might expect, a Rule 23(b)(2) case has less demanding provisions and requirements than Rule 23(b)(3).  

The distinctions among the types of class action cases are nuanced and evolving. 

Key Differentiators: 

  • 23(b)(1) Court may require reasonable notice if seeking monetary relief and does not require opt-out provisions. It is designed to protect the rights of the defendant from inconsistent adjudications as well as to protect the rights of absent class members. If opt-outs were required, it would nullify this protection and its distinction from 23(b)(3) claims. Example: ERISA class actions or limited fund actions. 
  • 23(b)(2) Notice is at the Court’s discretion, and there are no opt-out provisions.  This type of class action is primarily for injunctive relief.  
  • 23(b)(3) The Court requires notice which meets the best practicable notice standard and satisfies due process. This type of class action requires opt-out opportunities for class members and is most commonly used in cases that involve monetary relief of some type. This has the highest standards for notice to the class.  
Certification order

Rule 23 states that a certification order must be issued in an early practical and timely fashion by the court. The order that certifies a class must define the class and the class’ claims, issues, or defenses, as well as appoint counsel representation for the class. The information in the certification or denial of certification can be changed before a final judgment is issued.  

Notice Requirements for Class Actions

In a class action lawsuit, the way class members are notified is scrutinized by the courts and guidance is provided in Rule 23(c)(2).  

Courts routinely require a complete plan detailing how “reasonable” or “best practicable under the circumstances” will be achieved. This is to ensure that a large percentage of affected consumers receive notice that their rights will be affected.   

Courts have always favored individual direct notice to class members where the class members can be identified through reasonable means. In some cases, the court will require more than one avenue of communication or supplemental notice if direct notice is available. Pending changes to notice under Rule 23 (due to be finalized in December 2018) recognize greater flexibility in providing notice through electronic means, putting this form of notice on the same footing as U.S. Mail. 

In cases where reasonable means cannot identify individual class members, the court may require notice including publications or ads in various media vehicles. A successful notice communication program should select media channels that the target most common uses. This effort should be quantified using accepted advertising industry measurement sources that calculate the net audience reached by the media in a notice program.   

Best practice and quantification guidelines are found on the Federal Judicial Center website: FJC Notice and Claims Process Checklist

The parameters of Rule 23 enable the court to scrutinize a notice strategy and ensure communications are focused in the right direction with a simple, concise message. Using a notice media expert helps to avoid pitfalls and plan and implement a best practicable notice program.  

In addition to the avenues of notice, Rule 23 prescribes that notices should be written in plain language.   This sometimes gives lawyers pause as they are used to writing for the courts and often use legalese. You should engage your administrator and notice expert early on to help make sure the reading level is appropriate for the target audience and that it is written in clear and concise language.  


A judgment under Rule 23 defines who the court determines is the certified class and describes to whom notice of the lawsuit was sent to if required. The court may also define sub-classes, or classes of people with a distinct difference from the general class but who are still impacted by the litigation or settlement. 

Conducting the Action

This portion of Rule 23 details types of orders the court can issue, including efforts the court can take to protect class members through notification and representation.  

Settlement, Voluntary Dismissal, or Compromise

An action that has been certified by the court can only be settled, voluntarily dismissed, or compromised with the permission of the court. Rule 23 lays out procedures the court must follow in any of those cases, including offering notice of the action to class members. The court in all cases before it approves any action that would bind class members must consider whether the requested action would be fair, reasonable, and adequate for the class. Any class member may also object to the proposed disposition of the class action. 


Parties may appeal the certification or non-certification of a class action lawsuit within 14 days. However, unless a district judge or the court of appeals steps in, an appeal does not automatically pause proceedings. 

Class Counsel

After certifying a class, the court must appoint class counsel unless otherwise stated by statute. The court considers the investigative work potential counsel has already done, class action experience and knowledge of the law in question, and the resources that will be used to represent the class. In addition to counsel resources, the court may favorably consider counsel planning to use a settlement claims administrator and notice media company. The use of these third-party services brings added expertise and focus on the process for class members.  

Attorney’s Fees and Nontaxable Costs

Rule 23 specifies that the court can award reasonable attorney’s fees and nontaxable costs. However, a class member may object, and the court may hold a hearing to support its ruling. In some cases, the court may refer fee issues to a special master or magistrate judge.  

Settlement Administration

Kroll is the leader in complex settlement administration providing end-to-end expertise for class actions, mass torts, and regulatory and government administrations.