Richard Wolf
On September 13, 2016, the United States Court of Appeals for the Third Circuit set forth for the first time a “non-exhaustive list” of factors for a District Court judge to consider when determining whether joinder would be impracticable for purposes of the class action “numerosity” requirement. In re Modafinil Antitrust Litigation, No. 15-3475 (3d Cir. Sept. 13, 2016). These factors include (1) judicial economy, (2) the claimants’ ability and motivation to litigate as joined plaintiffs, (3) the financial resources of class members, (4) the geographic dispersion of class members, (5) the ability to identify future claimants, and (6) whether the claims are for injunctive relief or for damages. Id. at *31-32.
In order to gain class certification, a putative class must satisfy a number of requirements, including that “the class is so numerous that joinder of all members is impracticable.” F.R.C.P. 23(a)(1). The Rule does not define “numerous,” and it is left to the Court to decide on a case-by-case basis whether a particular putative class meets this requirement. Despite the need for individualized factual analysis, a class of 20 or fewer is generally too small and a class of over 40 is usually sufficiently numerous. In re Modafinil at *24-25. While the Court noted that “the number of class members is the starting point of our numerosity analysis,” id. at *25, the Court focused on whether joinder is impracticable.
Significantly, the Court stated that judges should not consider the possibility that plaintiffs may bring individual suits when making the numerosity determination. Id. at *32. The only relevant analysis is class action versus joinder of all interested parties. Id. Also of note, the Court remarked that the first two factors in determining whether joinder is impracticable—judicial economy and the ability to litigate as joined parties—are of primary importance. Id. at *33.
When looking at judicial economy, the focus is on “whether the class action mechanism is substantially more efficient than joinder of all parties.” Id. at *35. The Third Circuit’s primary disagreement with the District Court’s decision was the trial court’s emphasis on how late in the litigation the case was when deciding to grant class certification. Despite a strong dissent to the contrary, the Court held that “the late stage of litigation is not by itself an appropriate consideration to take into account as part of a numerosity analysis.” Id. at *36. A court should therefore not consider the “sunk costs” from past discovery and motion practice, nor the cost of further discovery needed if class certification is denied. Id. at *38-39.
With regard to the ability and motivation of plaintiffs to pursue their claims via joinder, the Court indicated that the focus should be on the stakes at issue for the individual claims and the complexity of the litigation. Id. at *42. Specifically, the evaluation may turn on the costs associated with pursuing the claims as joined parties. Id.
This decision is significant because it clarifies what factors a court in the Third Circuit will look at when determining whether a putative class meets the numerosity requirement of F.R.C.P. 23(a)(1). The decision also reveals that the most important of these factors are judicial economy and the claimants’ ability and motivation to litigate as joined plaintiffs.