Federal and state class actions are certified at equal rates, study finds.

Federal and state court judges are equally likely to both certify class actions and approve settlements of them, according to a new report by the Federal Judicial Center (FJC). The findings refute the conventional wisdom that state courts are more favorable to class action plaintiffs, while defendants fare better in federal courts.

Although the researchers found that federal judges are almost twice as likely to deny motions to certify a class, state court judges are less likely than federal judges to take any action at all (state judges act on about half of the motions before them, while federal judges act on about two-thirds). Thus, the researchers concluded, the reason defendants believe that federal courts are more likely to rule in their favor boils down to "a greater likelihood that federal courts will expressly deny class certification, while state courts are more likely not to act on the matter."

The FJC conducted the study at the request of the U.S. Judicial Conference's Advisory Committee on Civil Rules, which is considering revising Federal Rule of Civil Procedure 23 to create new certification standards for settlement class actions. The committee wished to explore whether two U.S. Supreme Court rulings that can be construed to restrict federal courts' ability to certify settlement class actions have influenced plaintiff and defense attorneys' choice of forum.

The researchers found that Amchem Products, Inc. v. Windsor (521 U.S. 591 (1997)) and Ortiz v. Fibreboard Corp. (527 U.S. 815 (1999)) "did not heavily influence" attorneys' forum choices.

What did matter to plaintiff attorneys was their own perception of favorable legal and procedural rules and how receptive a state or federal judge would be toward applying such rules; whether the claim was based on federal or state law; and the percentage of class residents and claims-related transactions in the state in which the case would be filed.

Defense attorneys reported their perceptions that federal courts' strict application of class certification rules was a strong factor affecting their decisions to remove cases to federal courts.

The study considered 621 class actions filed in federal court or removed there between 1994 and 2001 and concluded between 1999 and 2002. The researchers found that 22 percent of federal cases were certified--about equal to the 20 percent certification rate for cases remanded to state court--and that federal judges denied 27 percent of class certifications, versus state judges' 12 percent denial rate. The FJC also found that fees as a percentage of class action recoveries have not increased significantly since its 1996 study of such fees: about 29 percent of the total recovery.

For class actions that are filed but not certified, state and federal judges are equally likely to dismiss individual claims or enter summary judgment. This finding "[does] not support attorneys' perceptions of the predispositions of state judges to rule in favor of plaintiffs' interests or of federal judges to rule in favor of defendants' interests," the researchers concluded.

The study, Attorney Reports on the Impact of Amchem and Ortiz on Choice of a Federal or State Forum in Class Action Litigation, is available online at www.fjc.gov (click on "Recent Publications").