Addresses prerequisites to a class action; an order allowing class action and appointing class counsel; the dismissal, discontinuance, compromise or settlement of a class action and attorneys' fees.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A9573
SPONSOR: Weinstein TITLE OF BILL:
An act to amend the civil practice law and rules, in relation to class
actions
This is one in a series of measures being introduced at the request of
the Chief Administrative Judge upon the recommendation of his Advisory
Committee on Civil Practice.
Our Advisory Committee has reviewed and recommended we support, with
modification, the proposal of the New York City Bar Association to more
closely align New York law governing class actions in CPLR article 9
with the provisions of Rule 23 of the Federal Rules of Civil Procedure
which were enacted in 2003. Earlier versions of the federal rule adopted
innovations developed in New York's law. But the state procedures were
last revised in 1975 and should be amended to reflect the significant
improvements to the administration of class actions now available to
litigants in federal courts but not in New York's courts.
Accordingly, this measure would make the following amendments:
§ 901(B)
This measure would (1) eliminate the restriction on class actions
involving a penalty or minimum recovery, and (2) add language expressly
permitting class actions against governmental entities.
First, under current law, where a statute imposes a penalty or minimum
amount of recovery, New York law authorizes a class action only if the
statute expressly permits a party to file such a lawsuit. This approach
simply results in attempts to evade the § 901 restriction and prompts
unnecessary litigation about the meaning of and possible waiver of many
statutes' penalty or minimum recovery provisions. Equally important,
the rule does not apply in federal courts in New York, which results in
state-federal forum shopping. This measure would delete this language.
Second, although state common law once limited class actions against
governmental entities, the so-called "government operations rule," court
decisions have eroded this rule. This measure would authorize class
actions against governmental entities where all the prerequisites to
class certification under § 901(a) are otherwise met.
§ 902
This measure would (1) eliminate the fixed deadline to move for class
certification, and (2) direct appointment of counsel in the class
certification order.
Current law requires that a party move for class certification within
sixty days of the last responsive pleading. In some actions, whether
certification of one or more classes is-appropriate under § 901(a)
cannot be determined until after limited discovery. This measure would
replace the current fixed sixty-day deadline, which sometimes results in
pro forma certification motions, with a requirement that a party move at
a practicable time. The amendment would improve the ability of the
parties to craft and a court, where appropriate, to certify class defi-
nitions. This new subdivision matches the language of Rule 23 (c)(1).
Article 9 currently lacks substantive criteria and procedures for the
selection of class counsel. The proposal would adopt (with appropriate
cross-references within article 9) the language of federal Rule 23(g),
which identifies explicit factors for a court to consider when assessing
the ability of proposed counsel to represent the class(es), including
counsel's experience, the resources for litigating the action, and know-
ledge of the relevant area(s) of law. Additionally, this measure would
require a court to appoint class counsel when it first certifies the
class(es).
§ 908
Section 908 would be amended to address two concerns in the context of
prejudgment termination of an action.
First, under current law, a class action may not be dismissed, discon-
tinued, or compromised without both court approval and notice to the
class or a prospective class where one has not been certified yet.
However, notice can be burdensome and expensive without any correspond-
ing benefit. This measure would eliminate the mandatory provision of
notice and authorize a court to exercise its discretion to direct notice
where appropriate to protect the interests of the class or putative
class. The amended § 908 would track the comparable language of Rule
23(e), but would retain the existing requirement for judicial approval.
Second, the section would be expanded to include settlement of an
action.
§ 909
This measure would amend the section governing attorney's fees to
prevent any statutory conflict about the basis for a fee award and the
standard that governs when the fees are to be paid by a defendant.
First, the common law primarily authorized an award of fees when a
plaintiff's efforts created a common fund, by agreement of the parties,
or for bad faith by a defendant; statutes also authorized fee awards in
certain types of actions. The proposed new language - "that are author-
ized by law or by the parties' agreement" - would clarify that fees may
be awarded as authorized by these traditional common law theories, stat-
ute, and other bases in law. See Sponsor's Memo, L. 1975 c. 207. This
language also appears in Rule 23(h).
Second, the Legislature has authorized fee awards in actions for partic-
ular types of claims or defendants. For example, in CPLR 8601(a), the
Equal Access to Justice Act adopted in 1990, the Legislature authorized
a court to award attorney's fees in actions against the State, but no
fees may be awarded if the position of the State was "substantially
justified" or where "special circumstances make an award of fees
unjust."
The proposed addition of the phrase "to the extent not otherwise limited
by law" would direct that, where a specific statute authorizes a fee
award to be paid by a defendant, the standards of that more specific
statute govern eligibility for and the amount of any fee award, rather
than the general fee provision of § 909. Compare Cobell v. Norton, 407
F. Supp. 2d 140, 148-89 (D.D.C. 2005) (analyzing fee award and substan-
tial justification under federal EAJA in class action).
Our Advisory Committee asks us to express its appreciation and gratitude
to the State Courts of Superior Jurisdiction Committee, Council on Judi-
cial Administration and Litigation Committee on Class Actions in the New
York Courts of the New York City Bar Association for proposing this
legislation.
This measure, which would have no fiscal impact on the State, would take
effect on the first day of January next succeeding the date on which it
shall have become law.
LEGISLATIVE HISTORY:
None. New proposal.
STATE OF NEW YORK
________________________________________________________________________
9573
IN ASSEMBLY
March 17, 2016
___________
Introduced by M. of A. WEINSTEIN -- (at request of the Office of Court
Administration) -- read once and referred to the Committee on Judici-
ary
AN ACT to amend the civil practice law and rules, in relation to class
actions
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Subdivision b of section 901 of the civil practice law and
2 rules, as added by chapter 207 of the laws of 1975, is amended to read
3 as follows:
4 b. [Unless a statute creating or imposing a penalty, or a minimum
5 measure of recovery specifically authorizes the recovery thereof in a
6 class action, an action to recover a penalty, or minimum measure of
7 recovery created or imposed by statute may not be maintained as a class
8 action] Once the other prerequisites under subdivision a of this section
9 have been satisfied, class certification shall not be considered an
10 inferior method for fair and efficient adjudication on the grounds that
11 the action involves a governmental party or governmental operations.
12 § 2. Section 902 of the civil practice law and rules, as amended by
13 chapter 474 of the laws of 1975, is amended to read as follows:
14 § 902. Order allowing class action[. Within sixty days after the time
15 to serve a responsive pleading has expired for all persons named as
16 defendants in an action brought as a class action, the plaintiff shall
17 move for an order to determine whether it is to be so maintained] and
18 appointing class counsel. a. At an early practicable time after a person
19 sues or is sued as a class representative, the court must determine by
20 order whether to certify the action as a class action. An order under
21 this section may be conditional, and may be altered or amended before
22 the decision on the merits on the court's own motion or on motion of the
23 parties. The action may be maintained as a class action only if the
24 court finds that the prerequisites under section 901 have been satis-
25 fied. Among the matters which the court shall consider in determining
26 whether the action may proceed as a class action are:
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD14219-02-6
A. 9573 2
1 1. the interest of members of the class in individually controlling
2 the prosecution or defense of separate actions;
3 2. the impracticability or inefficiency of prosecuting or defending
4 separate actions;
5 3. the extent and nature of any litigation concerning the controversy
6 already commenced by or against members of the class;
7 4. the desirability or undesirability of concentrating the litigation
8 of the claim in the particular forum;
9 5. the difficulties likely to be encountered in the management of a
10 class action.
11 b. Unless a statute provides otherwise, the order permitting a class
12 action shall appoint class counsel. In appointing class counsel, the
13 court:
14 1. shall consider:
15 (i) the work counsel has done in identifying or investigating poten-
16 tial claims in the action;
17 (ii) counsel's experience in handling class actions, other complex
18 litigation, and the types of claims asserted in the action;
19 (iii) counsel's knowledge of the applicable law; and
20 (iv) the resources that counsel will commit to representing the class;
21 2. may consider any other matter pertinent to counsel's ability to
22 fairly and adequately represent the interests of the class;
23 3. may order potential class counsel to provide information on any
24 subject pertinent to the appointment and to propose terms for attorney's
25 fees and nontaxable costs;
26 4. may include in the appointing order provisions about the award of
27 attorney's fees or nontaxable costs under rule nine hundred nine of this
28 article; and
29 5. may make further orders in connection with the appointment.
30 c. When one applicant seeks appointment as class counsel, the court
31 may appoint that applicant only if the applicant is adequate under
32 subdivisions b and e of this section. If more than one adequate appli-
33 cant seeks appointment, the court must appoint the best applicant able
34 to represent the interests of the class.
35 d. The court may designate interim counsel to act on behalf of a puta-
36 tive class before determining whether to certify the action as a class
37 action.
38 e. Class counsel must fairly and adequately represent the interests of
39 the class.
40 § 3. Rule 908 of the civil practice law and rules, as added by chapter
41 207 of the laws of 1975, is amended to read as follows:
42 Rule 908. Dismissal, discontinuance [or], compromise or settlement.
43 A class action shall not be dismissed, discontinued, [or] compromised,
44 or settled without the approval of the court. [Notice of the proposed
45 dismissal, discontinuance, or compromise shall be given to all members
46 of the class in such manner as the court directs.] The following proce-
47 dures apply to a proposed dismissal, discontinuance, compromise or
48 settlement:
49 a. In class actions other than those actions described in subdivision
50 b of this rule, notice of the proposal need not be given unless the
51 court finds that notice is necessary to protect the interests of the
52 represented parties.
53 b. In all actions where a class has been certified and the action was
54 not brought primarily for injunctive or declaratory relief, reasonable
55 notice of the proposal shall be given in such manner as the court
A. 9573 3
1 directs to all class members who would be bound by such resolution of
2 the action.
3 c. The content of the notice and the expenses of notification shall be
4 governed by subdivisions (c) and (d) of section nine hundred four of
5 this article.
6 d. If the proposal would bind class members, the court may approve it
7 only after a hearing and on finding that it is fair, reasonable, and
8 adequate.
9 e. The parties seeking approval must file a statement identifying any
10 agreement made in connection with the proposal.
11 f. If the class action was not brought primarily for injunctive or
12 declaratory relief, the court may refuse to approve a dismissal, discon-
13 tinuance, compromise, or settlement unless it affords a new opportunity
14 to request exclusion from the class to individual class members who had
15 an earlier opportunity to request exclusion but did not do so.
16 g. Any class member may object to the proposal if it requires court
17 approval under this rule; the objection may be withdrawn only with the
18 court's approval.
19 § 4. Rule 909 of the civil practice law and rules, as amended by chap-
20 ter 566 of the laws of 2011, is amended to read as follows:
21 Rule 909. Attorneys' fees. If a judgment in an action maintained as a
22 class action is rendered in favor of the class, the court in its
23 discretion may award attorneys' fees to the representatives of the class
24 and/or to any other person that the court finds has acted to benefit the
25 class based on the reasonable value of legal services rendered and if
26 justice requires and to the extent not otherwise limited by law, allow
27 recovery of the amount awarded from the opponent of the class.
28 § 5. This act shall take effect on the first of January next succeed-
29 ing the date on which it shall have become a law.
