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Rule 23 – Class Actions

May 14, 2021 | Civil Procedure, Vermont

(a)Prerequisites to a Class Action. One or more members of a class may sue or be sued in an action in a superior court as representative parties on behalf of all only if (1) the class is so numerous that joinder of all members is impracticable, (2) there are questions of law or fact common to the class, (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and (4) the representative parties will fairly and adequately protect the interests of the class.
(b)Class Actions Maintainable. An action may be maintained as a class action if the prerequisites of subdivision (a) are satisfied, and in addition:

(1) the prosecution of separate actions by or against individual members of the class would create a risk of

(A) inconsistent or varying adjudications with respect to individual members of the class which would establish incompatible standards of conduct for the party opposing the class or,
(B) adjudications with respect to individual members of the class which would as a practical matter be dispositive of the interests of the other members not parties to the adjudications or substantially impair or impede their ability to protect their interests; or
(2) the party opposing the class has acted or refused to act on grounds generally applicable to the class, thereby making appropriate final injunctive relief or corresponding declaratory relief with respect to the class as a whole; or
(3) the court finds that the questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy. The matters pertinent to the findings include:

(A) the interest of members of the class in individually controlling the prosecution or defense of separate actions;
(B) the extent and nature of any litigation concerning the controversy already commenced by or against members of the class;
(C) the desirability or undesirability of concentrating the litigation of the claims in the particular forum;
(D) the difficulties likely to be encountered in the management of a class action.
(c)Determination by Order Whether Class Action To Be Maintained; Notice; Judgment; Actions Conducted Partially as Class Actions.

(1) As soon as practicable after the commencement of an action brought as a class action, the court shall determine by order whether it is to be so maintained. An order under this subdivision may be conditional, and may be altered or amended before the decision on the merits.
(2) In any class action maintained under subdivision (b)(3), the court shall direct to the members of the class the best notice practicable under the circumstances, including individual notice to all members who can be identified through reasonable effort. The notice shall advise each member that (A) the court will exclude the member from the class if the member so requests by a specified date; (B) the judgment, whether favorable or not, will include all members who do not request exclusion; and (C) any member who does not request exclusion may, if the member desires, enter an appearance through counsel.
(3) The judgment in an action maintained as a class action under subdivision (b)(1) or (b)(2), whether or not favorable to the class, shall include and describe those whom the court finds to be members of the class. The judgment in an action maintained as a class action under subdivision (b)(3), whether or not favorable to the class, shall include and specify or describe those to whom the notice provided in subdivision (c)(2) was directed, and who have not requested exclusion, and whom the court finds to be members of the class.
(4) When appropriate (A) an action may be brought or maintained as a class action with respect to particular issues, or (B) a class may be divided into subclasses and each subclass treated as a class, and the provisions of this rule shall then be construed and applied accordingly.
(d)Orders in Conduct of Actions. In the conduct of actions to which this rule applies, the court may make appropriate orders:

(1) determining the course of proceedings or prescribing measures to prevent undue repetition or complication in the presentation of evidence or argument;
(2) requiring, for the protection of the members of the class or otherwise for the fair conduct of the action, that notice be given in such manner as the court may direct to some or all of the members of any step in the action, or of the proposed extent of the judgment, or of the opportunity of members to signify whether they consider the representation fair and adequate, to intervene and present claims or defenses, or otherwise to come into the action;
(3) imposing conditions on the representative parties or on intervenors;
(4) requiring that the pleadings be amended to eliminate therefrom allegations as to representation of absent persons, and that the action proceed accordingly;
(5) dealing with similar procedural matters. The orders may be combined with an order under Rule 16, and may be altered or amended as may be desirable from time to time.
(e)Dismissal or Compromise. A class action shall not be dismissed or compromised without the approval of the court, and notice of the proposed dismissal or compromise shall be given to all members of the class in such manner as the court directs.
(f)Appeals. The Supreme Court may in its discretion permit an appeal from an order of the Superior Court granting or denying class action certification under this rule if application is made to it within 14 days after entry of the order. An appeal does not stay proceedings in the Superior Court unless the trial judge or the Supreme Court so orders.
(g)Disposition of Residual Funds.

(1) “Residual Funds” are funds that remain after the payment of all approved class member claims, expenses, litigation costs, attorneys’ fees, and other court-approved disbursements to implement the relief granted. Nothing in this rule is intended to prevent the parties to a class action from suggesting, or the trial court from approving, a settlement that does not create residual funds.
(2) Any order, judgment, or approved compromise in a class action certified under this rule that establishes a process for identifying and compensating members of the class shall provide that, in matters where the claims process has been exhausted and residual funds remain,

(A) at least fifty percent of the residual funds shall be disbursed to Vermont Legal Aid to support direct delivery of legal services to indigent persons, and
(B) the balance of remaining residual funds shall be disbursed to the Vermont Bar Foundation to support activities and programs that promote access to the civil justice system for indigent persons, or shall be disbursed to one or more nonprofit organizations or foundations which support projects that will benefit the class or similarly situated persons consistent with the objectives and purposes of the underlying causes of action on which relief was based.

Vt. R. Civ. P. 23

Amended March 6, 2002, eff. July 1, 2002; amended Sept. 20, 2017, eff. Jan. 1, 2018; amended June 13, 2019, effective August 15, 2019.

Reporter’s Notes-2018 Amendment

Rule 23(f) is amended to extend its 10-day time period to 14 days consistent with the simultaneous “day is a day” amendments to V.R.C.P. 6.

Reporter’s Notes-2019 Amendment

Rule 23(g) is added to provide for the disbursement of residual funds that remain after satisfaction of all claims under a class action judgment or settlement.

With the new rule, Vermont now joins 23 states and Puerto Rico that, as of July 2018, had adopted similar provisions by court rule or statute-most since 2011. See ABA Res. Ctr. for Access to Justice Initiatives, Legislation and Court Rules Providing for Legal Aid to Receive Class Action Residuals (2017), https://www.americanbar.org/content/dam/aba/administrative/legal_aid_indigent_defendants/ATJReports/ls_sclaid_atj_cypres.pdf [https://perma.cc/CV3T-995K].

In support of this effort, the American Bar Association at its August 2016 annual meeting resolved that states should adopt measures “authorizing the award of class action residual funds to nonprofit organizations that improve access to civil justice for persons living in poverty” after reasonable efforts to compensate class members, unless such efforts are not feasible. ABA Resolution/Report 104 (August 2016) [hereinafter ABA Rep. 104], https://www.americanbar.org/content/dam/aba/administrative/legal_aid_indigent_defendants/ATJReports/ls_atj_cypres.pdf [https://perma.cc/EXN4-AVDE].

Rule 23(g)(1) defines “residual funds” as those remaining under an order or judgment after payment of all approved claims, expenses, and disbursements. As ABA Rep. 104 states, “Residual funds are often a result of the inability to locate class members or class members failing or declining to file claims or cash settlement checks. Such funds are also generated when it is ‘economically or administratively infeasible to distribute funds to class members if, for example, the cost of distributing individually to all class members exceeds the amount to be distributed,’ ” (quoting In re Baby Prods. Antitrust Litig., 708 F.3d 163, 169 (3d Cir. 2013)). The final sentence of paragraph (1) makes clear that a settlement need not create residual funds-for example, because the total settlement amount is allocated in specific sums payable to identified class members and for other identified disbursements.

Nothing in Rule 23(g) is intended to affect the obligations of any party to a class action under the State’s unclaimed property statutes, set forth in 27 V.S.A. ch.14. See 27 V.S.A. §§ 1241(13) (Definitions), 1242(a) (Presumptions of abandonment), and 1259(a) (Periods of limitation). Accordingly, “residual funds” subject to this rule do not include any unclaimed property that must be reported to the State Treasurer under 27 V.S.A. ch. 14.

Rule 23(g)(2) provides a formula for the distribution of residual funds. As ABA Rep. 104 notes, “The fundamental purpose of every class action is to offer access to justice for a group of people who on their own would not realistically be able to obtain the protections of the justice system.” ABA Report 104 further notes that courts have used the equitable cy pres doctrine as a basis for making allocations of class action residual funds in ways consistent with the claims or interests involved in the action, citing Principles of the Law of Aggregate Litigation § 3.07 (Am. Law Inst.). Thus, cy pres decisions have included “recognized organizations that provide access to justice for low-income, underserved, and disadvantaged people,” and recently adopted state residual class action rules and statutes have codified those principles. ABA Rep. 104.

Rule 23(g)(2)(A) provides that when there are residual funds, the judgment or other appropriate order or agreement must require that “at least fifty percent” of those funds will be disbursed to Vermont Legal Aid (VLA) for provision of legal services to the indigent. Subparagraph (2)(A) further would permit a disbursement to VLA of more than fifty percent of the residual funds in the discretion of the court or parties. It is appropriate to make VLA the primary beneficiary of the rule because it is the sole statewide provider of legal services and is entirely dependent on politically vulnerable state and federal appropriations, the annually variable results of IOLTA proceeds, and annual giving through the Vermont Bar Foundation (VBF).

Rule 23(g)(2)(B) is also mandatory but gives the court or parties discretion to provide in the judgment or other instrument that any remaining balance may be distributed either to the VBF for its access-to-justice programs or to a nonprofit or nonprofits with programs beneficial to the class or others that are consistent with “the underlying causes of action.” Presumably, appropriate VBF programs would be those included in its noncompetitive grants program, as well as grantees awarded competitive grants with access-to-justice goals. Disbursement to other nonprofits would require a nexus with the underlying claim-for example, awards to one or more humane societies in an action against a meat-processing company brought by a class of domestic animal owners claiming inhumane treatment in the corralling and slaughtering of animals.