Class Action Litigation - The Coming of the Storm
October 31, 2011
By: Craig D. Joyce and Adrian P. Castro
Initiating a class action in Colorado just got easier as a result of a new “rigorous analysis” standard articulated by the Colorado Supreme Court. If you are involved with a business that might be the recipient of a class action lawsuit, be aware that as a defendant you now need to be prepared to vigorously defend your position as soon as litigation begins. Timely preparation could help you save significant expenses down the road.
What has changed? Four recent opinions released by the Colorado Supreme court articulate a new standard dealing with class action certification: the “rigorous analysis” standard. Under this standard, a plaintiff seeking to certify a class action does not have to prove the elements necessary for class certification by a preponderance of the evidence, or for that matter any evidentiary standard; all that is required is that the trial court conduct a “rigorous” examination of the evidence and arguments presented. The analysis is simply a procedural process involving the formal review of the evidence. This analysis only requires the trial court to conduct a hearing and review the evidence presented without reference to any evidentiary standard. After engaging in this “rigorous analysis,” a trial court can certify a class if it believes the requirements for class certification are met. There is no standard of proof – the determination is left solely to the discretion of the trial judge. Accordingly, litigants will be subject to the preferences of a particular judge, as opposed to a universal standard.
Given the expense associated with defending class action lawsuits, and the large amounts of damages usually at stake, the “rigorous analysis” standard emphasizes the need for class action litigants to aggressively defend themselves the moment litigation commences. With class certification taking place early in a case, a defendant must formulate a strategy and gather evidence immediately, or risk being unprepared for the class certification hearing. With plaintiffs no longer required to meet any evidentiary standard, a defendant must aggressively marshal and present evidence supporting its theories—and refuting the plaintiffs’— or risk early certification of the class, with the attendant expense of providing notice to all potential class members. Once the class is certified, it will be difficult to appeal a trial court’s decision.
There is a slight glimmer of hope for defendants: Litigants may move to decertify a class before trial if discovery uncovers evidence defeating any of the class certification requirements. Although obtaining such evidence would require defendants to engage in costly discovery, it does provide an opportunity to avoid a costly trial against a class that should not have been certified, and further emphasizes the need for an aggressive litigation strategy early in the case.
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This Article is published for general information, not to provide specific legal advice. The application of any matter discussed in this article to anyone's particular situation requires knowledge and analysis of the specific facts involved.
Copyright © 2011 Fairfield and Woods, P.C., ALL RIGHTS RESERVED.
Comments or inquiries may be directed to:
Craig D. Joyce.