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Class Action Lawsuits in Colorado State Courts

Generally speaking, class action lawsuits are lawsuits brought on behalf of an entire group of people as opposed to a single plaintiff or limited number of plaintiffs. The basic purpose of a class action is to allow a representative to bring suit on behalf of herself and other similarly situated plaintiffs to avoid the need for all of the plaintiffs to file their own separate lawsuits and litigate the same issues.

Accordingly, class action lawsuits are primarily oriented towards incentivizing judicial efficiency such that one lawsuit can decide the outcome for numerous parties that have the same or similar claims. This article discusses requirements and considerations specific to class action lawsuits in Colorado state courts.

Importantly, while this article is specific to Colorado state law, the Colorado state rule governing class actions is modeled after the federal rule governing class actions. Accordingly, while different, class actions in Colorado state court have similar requirements to class actions brought in federal court.

 

Pre-Requisites for Bringing a Class Action Lawsuit in Colorado State Courts

Class actions in Colorado state courts are governed by Colorado Rule of Civil Procedure (“C.R.C.P.”) 23. While C.R.C.P. 23 is relatively lengthy, the rule explicitly lays out prerequisites that must be met in order to bring a class action lawsuit. Those perquisites are:

(1) The class must be 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 entire class; and

(4) The representative parties will fairly and adequately protect the interests of the class.

See C.R.C.P. 23(a). Importantly, these prerequisites must be proven by a preponderance of the evidence by the party seeking class action status. If these prerequisites are not met, then the class will not be certified and the action will be dismissed. See Class Action Certification Under C.R.C.P. 23: Procedural and Evidentiary Considerations, 39 Colo.Law. 29 (2010). Each of these prerequisites will be discussed in sequence below.

With respect to the first prerequisite, numerosity, the class must consist of enough people that it would otherwise be impracticable to join all of the members separately in the lawsuit. Importantly, there is no specific number of people needed for a class action to meet this prerequisite. Instead, whether a particular class is numerous enough depends on the particular circumstances of each case. Along these lines, and by way of example, courts have granted class certification to groups of fewer than 30 members and denied certification to groups of more than 100 members. See Jackson v. Unocal Corp., 231 P.3d 12, 23 (Colo. App. 2009) (reviewing certification of a class of 66 adjacent property owners).

In order for the presiding court to make a determination as to whether the numerosity prerequisite is met, the class must be sufficiently defined so that it can be determined who qualified for the class and who does not; that is, who the class members are. Notably, this does not mean the class has to be so specifically defined that every potential member can be identified at the outset of litigation; rather, the definition must be sufficient enough that the court can determine whether a particular individual qualifies as a member.

With respect to the second pre-requisite, commonality, the members of the class must be similarly situated such that the causes of action for each class member are based on the same legal theory or arise from the same set of broad circumstances. Importantly, it is not necessary that every class member have the exact same factual background, there may be varying factual situations between class members; however, the factual backgrounds for the members must still be grounded in common facts and legal issues in order to meet the commonality prerequisite. See Reyher v. State Farm Mut. Auto. Ins. Co., 230 P.3d 1244, 1255 (Colo. App. 2009).

The third pre-requisite, typicality, focuses on the class representative or representatives that are brining suit on behalf of the class. The class representatives are those individuals actually named in the lawsuit and that are effectively the face of the entire class. With respect to the typicality prerequisite, the claims or defenses of the class representative must be typical of the claims of defenses of the entire class in order for the prerequisite to be satisfied.

The purpose of this requirement is to ensure that all of the class members’ claims and defense will be fully presented in the action; that is, that the class representatives claims effectively represent the claims of the entire class. In order to meet the typicality prerequisite, the class representative must show that the same unlawful conduct has been directed at both the class representative and the proposed class members. See Reyher v. State Farm Mut. Auto. Ins. Co., 230 P.3d 1244, 1256 (Colo. App. 2009).

Lastly, the fourth prerequisite, adequacy of representation, requires that the class representative must fairly and adequately protect the interests of the class. In performing this analysis, the presiding court looks to whether the class representative will advance the interests of the class, has any conflict with the other class members, and is represented by competent and experienced counsel. If these requirements are met, the class representative will likely be found an adequate representative of the entire class. See Reyher v. State Farm Mut. Auto. Ins. Co., 230 P.3d 1244, 1257 (Colo. App. 2009).

 

Maintainable Class Action Categories in Colorado State Courts

Where a plaintiff is able to meet all of the prerequisites for a class action, the analysis then moves to whether the class action fits into a maintainable class action category. Where the class action does not fit into a maintainable class action category, it will not be allowed to proceed regardless of whether the prerequisites have been met.

In particular, under C.R.C.P. 23(b), there are four categories that a class action must fall into in order to be maintainable. Specifically, the rule provides:

(b)          Class Actions Maintainable. Any action may be maintained as a class action if the prerequisites . . . 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 interest; 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 class action.

See C.R.C.P. 23(b). These categories will be discussed in sequential order below.

The first category for maintainable class actions occurs where not allowing the class action to proceed, and requiring the plaintiffs to pursue separate actions, would create a risk of inconsistent or varying judgments that would establish incompatible standards for the defendant. For example, for a nuisance violation, requiring adjoining landowners to bring separate lawsuits could result in the nuisance violator having different obligations to each landowner. In contrast, only by allowing the nuisance lawsuits to be brought as one action could the violator’s standard of conduct towards the landowners be definitively established. See Cook v. Rockwell International Corporation, 181 F.R.D. 473, 485 (D. Colo. 1998).

The second category for maintainable class actions applies where, if the class members were required to proceed by individual lawsuits, the results of those lawsuits would be dispositive of the interests of members not parties to the lawsuit. For example, in an action where there is a limited common fund to satisfy judgments, if multiple individuals brought actions claiming an interest in the fund, it could result in a scenario where the fund is exhausted but individuals that had not yet brought suit would be unable to obtain relief. That is, the prior lawsuits would be dispositive of subsequent lawsuits since there would be no funds left to satisfy the subsequent judgments. Accordingly, a class action would be appropriate in this case to establish all the class members’ rights to the fund at the same time. See Dickinson v. Burnham, 197 F.2d 973 (2d Cir. 1952).

The third category for maintainable class actions is where the class is seeking injunctive or declaratory relief against the defendant for acting or refusing to act on grounds that are applicable to the entire class. These types of action are most common where a class of citizens is challenging the statutes, regulations, practices, or policies of a governmental entity; or where the class is seeking relief against a defendant for discriminatory practices. Notably, a class action may not be maintained under this category if the action is predominantly oriented towards seeking money damages. See City of Lakewood v. Colfax Unlimited Ass’n, Inc., 634 P.2d 52 (Colo. 1981).

The fourth category for maintainable class actions is where questions of law or fact common to the class members predominate over any questions affecting individual members and where a class action is superior to other available methods for fairly and efficiently litigating the matter. In determining whether a class action appropriately fits in this category, courts consider:

– The interest class members may have in controlling the prosecution or defense of their own separate action;

– The extent and nature of any litigation already commenced by or against members of the class;

– The desirability or undesirability of concentrating the litigation of the claims in one particular forum; and

– The difficulties likely to be encountered in managing the class action.

See C.R.C.P. 23(b)(3). Within this category, specific factors courts will consider in determining whether a class action is appropriate include, whether proof at trial would be predominantly common to the class or predominantly unique to each class member; how individualized the damages are to each class member; the location of the parties, witnesses, and evidence in relation to the ease of litigating the case in the chosen forum; and how much it would cost for each class member to litigate each claim separately. Importantly, none of these factors are dispositive and courts must weigh these considerations specific to each case in order to determine whether certification of the class is appropriate.

Where a class action meets the prerequisites enumerated by the rule and falls into a maintainable class action category, the class will be eligible for certification and the action will be allowed to proceed.

 

The Class Action Certification Process in Colorado State Courts

Once a class action is filed, the presiding court has an obligation to determine whether the class action meets the prerequisites and requirements discussed above and is, therefore, eligible to be maintained. Either side may move the court to decide whether certification of the class is appropriate and, if no side does, the court still has an affirmative duty to make the determination of its own accord. See C.R.C.P. 23(c).

In determining whether a class action should be certified, the class representatives bears the burden of proving by a preponderance of the evidence that the four prerequisites of C.R.C.P. 23(a) have been met and, also, that the class action fits into at least one of the maintainable class action categories enumerated in C.R.C.P. 23(b). If the class representative fails to meet any of these requirements, the class will not be certified and the lawsuit will not be allowed to proceed as a class action.

Importantly, because the class representative bears the burden of demonstrating that a class action is appropriate, the class representative should be sure to plead sufficient facts in the complaint to support certification and, also, support those allegations with exhibits or affidavits if necessary. While class certification is to be construed broadly, courts still must conduct a rigorous analysis of the theories and facts pertaining to certification and deny class certification where the prerequisites and requirements have not been met. Along these lines, courts have considerable discretion in approving or denying a class and retain that discretion to alter or decertify the class over the course of the lawsuit.

Once a class certification is made, an appeal can be made pursuant to the rules and procedure outlined in Colorado Revised Statute § 13-20-901. Specifically, a court of appeals may permit an interlocutory appeal so long as the application is made within 14 days after entry of the class certification order. Notably, the granting of an interlocutory appeal does not automatically stay proceedings in the lower court unless the district court or appeals court specifically orders so. See Clark v. Farmers Ins. Exch., 117 P.3d 26 (Colo. App. 2004) (discussing the five-factor test for determining whether permitting an interlocutory appeal is appropriate).

© 2017 J.D. Porter, LLC. Author: Jordan Porter. Denver, Colorado.

Disclaimer: The information on this website is intended to be general information only and not legal advice. Laws change frequently and the information on this website may not be up to date, nor is the information intended to be fully comprehensive. For legal advice specific to your case please contact J.D. Porter, LLC or another licensed attorney.