We have been arguing for years that defendants need a mechanism for challenging class actions before the monetary pressure of the discovery phase forces them to settle cases of little or no merit, but our pleas have fallen on deaf ears. However, not all hope is lost. As Law360 reports, “A New Jersey appeals court Friday refused to revive class claims against automotive insurers… finding nothing wrong with a judge’s decision to strike the class allegations before discovery.” The case is a good example of why New Jersey’s current law governing the right to appeal class certification decisions is flawed.
In Myska et al. v. New Jersey Manufacturers Insurance Co. et al., the trial court decertified a proposed class of litigants on a motion from the defendant before discovery had concluded. The plaintiffs appealed, arguing that a decision on the validity of a class cannot and should not be made until after discovery has been completed.
Last week the Appellate Division affirmed that courts can rule on the propriety of a class before discovery is completed. This is a boon to litigants who want to ensure that cases are decided on their merits, not on the pressure exerted by the expense of litigation.
NJCJI’s own Alida Kass is quoted in another Law360 piece analyzing the case:
While rarely used, the ability to have class certification decided before discovery serves a kind of gatekeeping function…
“If you were to have a bright-line rule that class certification could not be denied prior to discovery, you would probably see a lot more cases that merited denial prior to discovery,” Kass said. “The fact that you have that available as an option where the class clearly does not merit certification is probably to the benefit of the courts and the practice in this area.”
Thinking about what options would have been available to the defendants had the lower court judge certified the class and allowed discovery to continue highlights the importance of allowing class certification decisions to be appealed, and how our law could be improved in this area.
If the trial court or appellate court had certified the class, the defendants would not have had the right to have that decision reviewed because in New Jersey parties can only appeal certification decisions at the time they are made if the appellate court gives them permission to do so or the certification decision ends the case (as it did in the Myska case). Most courts are loathe to grant a motion for interlocutory review because they generally do not doubt their own decision-making.
When a questionable class certification decision is made, the defendant faces a no-win situation: it can spend resources litigating a class action case that may have been erroneously certified, or it can settle, even if it did nothing wrong. Most choose to settle.
A rule change permitting interlocutory appeal of class certification decisions no matter which party the decision favors would enhance the predictability and fairness of the judicial process, and increase the likelihood that courts reach decisions based on the merits of the cases before them.
NJCJI is monitoring the Myska case closely, and is also keeping an eye on what happens post-decision in Vincent Daniels v. Hollister Co., since a footnote in that decision could also impact the law on interlocutory appeals.
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