Discovery of Absent Class Members in Class Actions

Counsel representing parties defending against class action suits routinely seek discovery of absent class members, but it is generally not permitted. The sharp limits on class member discovery were first articulated in a classic class action ruling handed down almost 40 years ago: Clark v. Universal Builders, Inc., 501 F.2d 324 (7th Cir. 1974).

In that case, a class of African Americans who purchased newly-constructed houses in Chicago from defendants alleged violation of their rights under the Thirteenth and Fourteenth Amendments and under the Civil Rights Act of 1964:

Plaintiffs contended that the demand among blacks for housing greatly exceeded the supply of housing available in the black market and that the defendants exploited this situation by building houses in or adjacent to black areas and selling the houses to plaintiffs at prices far in excess of the amounts which white persons paid for comparable residences in neighboring urban areas, and on onerous terms far less favorable than those available to white buyers of similar properties…

Clark, 501 F.2d at 327. Plaintiffs’ case went to trial, after which the district court judge granted defendants’ motion for directed verdict finding “plaintiffs have not painted a pretty picture of the defendants, but that picture is a picture of exploitation for profit, and not racial discrimination.” Id.

On their appeal, plaintiffs challenged the trial court’s grant of a directed verdict, but also a number of evidentiary and procedural rulings, including the “propriety of dismissing with prejudice class members who failed to answer interrogatories or appear for depositions.” Id. at 340.

In addition to finding plaintiffs’ case should have been put before the jury, Id. at 334, the appellate court found that the district court erred in dismissing the claims of absent class members, Id. at 340-1.

Although no showing on the merits of defendants’ discovery requests was ever made, based on the nature of the discovery defendants sought, the appellate court did not believe defendants could have met the burden, which the court described as follows:

[I]n appropriate circumstances absent class members may be propounded written interrogatories on a showing that the information requested is necessary to trial preparation and that the interrogatory is not designed as a tactic to take undue advantage of the class members or as a stratagem to reduce the number of claimants…

The interrogatories sought answers to questions that would have required the assistance of technical and legal advice in understanding the questions and formulating responsive answers thereto. Indeed, certain of the questions pertained to allegations that were proved at trial through the use of expert witnesses. In addition, some of the interrogatories sought information on matters already known to defendants.

Id. citing Brennan v. Midwestern United Life Ins. Co., 450 F.2d 999, 1005 (7th Cir. 1971).

Today, it is well-established that class member discovery is prohibited unless the proponent can show (1) that seeking such discovery is not a tactic to take advantage of the class or to reduce the number of class members; (2) the discovery is necessary; (3) that understanding the discovery requests and formulating responses do not require technical or legal advice; and (4) that the discovery does not seek information on matters already known to the defendants. See, e.g., Kline v. First W. Gov’t Secs., 1996 U.S. Dist. LEXIS 3329, *8-9 (E.D. Pa. Mar. 11, 1996).

Discovery of absent class members is generally not appropriate. As later cases make plain, there is good reason to set such a stringent standard. “One of the principal advantages of class actions over massive joinder or consolidation would be lost if class members were routinely subjected to discovery.” Manual for Complex Litigation § 21.41, (4th ed. 2004).

Abbey Spanier, LLP, located in New York City, is a well-recognized national class action and complex litigation law firm.