M E M O
TO: Joint Procedure Committee
FROM: Mike Hagburg
RE: Rule 23, N.D.R.Civ.P.; Class Actions
The Committee addressed N.D.R.Civ.P. 23 at its September 27-28, 2001, meeting, and approved several amendments. At its January 24-25, 2002, meeting, the Committee rejected further style amendments to the rule. After its January discussions on amendments to the existing rule, the Committee instructed staff to research whether a version of N.D.R.Civ.P. 23 that incorporates the provisions of F.R.Civ.P. 23 should be adopted in North Dakota. The requested research is discussed below. A draft of N.D.R.Civ.P. 23 that incorporates the recent changes approved by the Committee is included in the materials for the Committee's review, as is an alternate draft of N.D.R.Civ.P. 23 based on the federal class actions rule.
The Uniform Class Actions Rule was developed in response to a series of United States Supreme Court decisions that seemed to limit the jurisdiction of federal courts over class actions. Note, The Iowa Uniform Class Actions Rules: Intended Effects and Probable Results, 66 Iowa L. Rev. 1241, 1242-1243 (1981). The National Conference of Commissioners on Uniform State Laws decided to prepare a uniform rule that states could use to handle the anticipated increase in state court class actions. Id. The uniform rule was lengthier and more detailed than the federal rule because NCCUSL sought to provide more guidance to judges inexperienced with class actions. Allen Vestal, Uniform Class Actions, 63 A.B.A.J. 837, 837 (1977).
North Dakota was the first state to adopt the Uniform Class Actions Rule, doing so February 15, 1977. N.D.R.Civ.P. 23, Explanatory Note. Iowa (residence of the chairman of the committee that drafted the uniform rule) followed on July 7, 1980. See Iowa R.Civ.P. 42.1, et seq., History. No other states have adopted the Uniform Class Actions Rule. On the other hand, 43 states have adopted class actions rules based on or derived from the federal rule. Twenty-six of these states have adopted class actions rules fundamentally identical to the federal rule. North Dakota's neighbor states of Minnesota, South Dakota and Montana all have class actions rules that are fundamentally identical to the federal rule. See Minn.R.Civ.P. 23.01, et seq.; Mont.R.Civ.P. 23; S.D.C.L. 15-6-23.
There are substantial differences between the federal class actions rule and the uniform rule. As noted above, the uniform rule is more detailed. The difference in the level of detail can be seen in the alternate draft of N.D.R.Civ.P. 23 provided. Under the uniform rule, there are 13 factors to be given weight by the court in determining whether to certify a class. N.D.R.Civ.P. 23(b)(1). The court is required to make three specific findings before determining that representative parties protect the interest of the class. N.D.R.Civ.P. 23(b)(2). Class member notice requirements under the uniform rule are very detailed. N.D.R.Civ.P. 23(g). Only specific types of counterclaims may be brought under the uniform rule. N.D.R.Civ.P. 23(k). The uniform rule sets forth detailed requirements regarding attorney fees and expenses. N.D.R.Civ.P. 23(p); N.D.R.Civ.P. 23(q). Likewise, there are specific guidelines regarding the distribution of any money judgment awarded. N.D.R.Civ.P. 23(o).
One unique aspect of the uniform rule that the Committee recently discussed at some length is the provision in N.D.R.Civ.P. 23(d)(3) allowing interlocutory appeals. See Minutes of Meeting, Joint Procedure Committee, September 27-28, 2001, at 13-15, 18-19. The Committee decided to retain this provision rather than adopting the new federal alternative contained in F.R.Civ.P. 23(f), which allows interlocutory appeals at the discretion of the appellate court. Minnesota, Montana and South Dakota have not yet adopted F.R.Civ.P. 23(f). In deference to the opinions expressed by the Committee in its discussions of the interlocutory appeal provisions of N.D.R.Civ.P. 23, North Dakota's current interlocutory appeal provisions are included in subdivision (f) of the alternate draft of N.D.R.Civ.P. 23 provided.
Prior to adoption of the uniform rule, N.D.R.Civ.P. 23 was the same as the federal rule. Minimizing the differences between the uniform rule and the federal rule, the North Dakota Supreme Court has stated that "Rule 23, N.D.R.Civ.P., is similar although not identical to Rule 23, F.R.Civ.P." Decoteau v. Nodak Mut. Ins. Co., 2001 ND 182, p 11, 636 N.W.2d 432. Based on this reasoning, the Court has referred to federal cases when analyzing North Dakota class action cases. See id. In light of the approach the Court has taken, it is possible to conclude that the Court views current N.D.R.Civ.P. 23 merely as a more detailed version of F.R.Civ.P. 23.
There is a significant amount of federal case law interpreting F.R.Civ.P. 23 available. There is also a respected five-volume treatise focusing on federal class action case law, Newberg on Class Actions. The North Dakota Supreme Court has cited the Newberg treatise in four cases. On the other hand, case law specifically interpreting the uniform rule is sparse. Staff was able to locate nine North Dakota and 19 Iowa cases which seemed to provide some insight on the uniform rule. By way of comparison, there are 30 Minnesota cases, eight South Dakota cases and 13 Montana cases interpreting these states' versions of the federal class actions rule.
A factor the Committee may wish to consider in deciding whether to recommend adoption of some version of the federal rule in North Dakota is that a significant revision of the federal rule class actions rule has been proposed. Under the proposal, additional provisions would be added to the federal rule to allow some discovery before certification, to require specific content in the certification order and the class notice, to require more court involvement in settlements, to impose stricter class counsel approval requirements, and to allow greater court involvement in determining attorney fees. While the language of the proposed new federal provisions are not identical to those of the uniform rule, the proposed new federal provisions seem to deal with issues the uniform rule has already dealt with.