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Possible Changes to NJ Class Action Procedure

On May 21, 2012, the New Jersey Assembly Judiciary Committee voted 6-0 in favor of A-894, which would establish a right to an immediate interlocutory appeal from class certification determinations in class action lawsuits. A class action is a legal mechanism that enables people allegedly harmed by a common act or omission to join with others who are similarly situated. By joining like claims together, litigation becomes more affordable and efficient. To help ensure that this litigation tool is not abused, plaintiffs are required to demonstrate that their claims are common and typical of the putative class, that the putative class is large enough to make the bringing of individual claims impracticable, and that legal representation of the named plaintiffs can adequately and fairly represent the interests of all class members. If a plaintiff is able to meet these threshold requirements, a trial court may grant certification, permitting the class action to proceed.

Under the current law in New Jersey, appellate review of a trial court’s class certification determination may only be sought when (1) leave to appeal is approved by the trial court, or (2) a final disposition of the case is reached at the trial level. A-894 would enable a party to appeal a class certification determination “as of right,” rather than requiring the party to seek leave from the trial court, or first spend time pursuing or defending the matter on an individual basis.

A-894 follows a national trend of tightening class certification standards. For example, Connecticut, Florida, Ohio, Oklahoma, and Texas, have adopted interlocutory appeal measures similar to New Jersey’s A-894. Additionally, in 2005, the Federal Government passed the Class Action Fairness Act (“CAFA”) which toughened pleading requirements, facilitated interlocutory appeals, and heightened the standards for class settlements and class counsel fees. Just last year, the United States Supreme Court ruling in Dukes v. Wal-Mart Stores, Inc., 131 S. Ct. 2541 (2011) heightened the certification standard by requiring that a putative class not only presents common claims, but also generates common answers – a rather challenging hurdle to surmount, especially for the large national putative classes, like the one at issue in Dukes.

Current case law in New Jersey already allows for a fluid process throughout the certification stage whereby additional claims can be certified or previously certified claims can be decertified as discovery progresses. This procedural process was most recently re-affirmed by the New Jersey Supreme Court in Iliadis v. Wal-Mart Stores, Inc., 191 N.J. 88 (2007).

Those in favor of the measures like A-894 believe that such procedures reduce the time and expense borne by plaintiffs, defendants, and the courts by allowing instant review of class certification decisions before further litigation ensues.  Those in favor argue that the measure benefits plaintiffs by allowing for the instant appeal of a certification denial, which is often the last nail in the coffin for any putative class action.

Those opposed to measures like A-894 believe that these laws are not procedural safeguards, but rather additional weapons for deep-pocketed class action defendants to use against class action plaintiffs with lesser resources. Allowing class certification appeals as of right, it is argued, adds delay and expense to an already lengthy and expensive process. Opponents believe that such procedural hurdles, like heightened certification standards and appeals as of right, considerably minimize the effectiveness of the class action tool.

Consumer advocacy and free enterprise interest groups continue to evaluate and comment on the bill as it proceeds through the New Jersey Legislature. Meanwhile, the legal profession eagerly awaits its final determination.

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