IV. Parties
Rule 17. Parties plaintiff and defendant.
(a) Real Party in Interest. Every action shall be prosecuted in the name of the real party in interest. An executor, administrator, guardian (conservator), bailee, trustee of an express trust, a party with whom or in whose name a contract has been made for the benefit of another, or the State or any officer thereof or any person authorized by statute to do so may sue in his own name without joining with him the party for whose benefit the action is being brought. No action shall be dismissed on the ground that it is not prosecuted in the name of the real party in interest until a reasonable time has been allowed after objection for ratification of commencement of the action by, or joinder or substitution of, the real party in interest; and such ratification, joinder or substitution shall have the same effect as if the action had been commenced in the name of the real party in interest.
(b) Infants or Incompetent Persons. Whenever an infant or incompetent person has a guardian, the guardian must sue or defend on behalf of the infant or incompetent person. If an infant or incompetent person does not have a duly appointed guardian, he may sue by his next friend or by a guardian ad litem. The court shall appoint a guardian ad litem for an infant or incompetent person not otherwise represented in an action or shall make such other order as it deems proper for the protection of the infant or incompetent. No judgment shall be rendered against an infant or incompetent until after a defense by a guardian or guardian ad litem, who shall be appointed by the court upon application of any interested party and who shall promptly respond to the claim against the infant or incompetent as provided by these Rules.
History. Amended January 22, 2004
Reporter's Notes to Rule 17: - 1. Rule 17 is a slightly modified version of FRCP 17. Basically this rule deletes various provisions of Sections (a) and (b) of FRCP 17 which have reference to actions brought by the United States or under a federal statute and to diversity of citizenship actions.
2. Section (a) is essentially the same as superseded Ark. Stat. Ann. 27-801 and 27-804 (Repl. 1962). It has generally been held that the real party in interest is the person who can discharge the claim upon which the action is brought and not necessarily the person who is ultimately entitled to the benefit of recovery. House v. Long, 244 Ark. 718, 426 S.W.2d 814 (1968). The federal courts have generally held that the effect of such rule is to require the action to be brought by the person who is entitled to enforce the right or claim. Wright & Miller, Federal Practice And Procedure, Sec. 1543. The list of persons in 17(a) is not meant to be conclusive and exhaustive and any person possessing the right to enforce a particular claim is deemed the real party in interest even though he is not specifically identified in the rule. Section (a) of this rule does not appreciably alter Arkansas law on real parties in interest.
3. While the Federal Rule is not clear on whether objection to a party as not being the real party in interest must be made by Rule 12(b) motion or by answer, Ohmer Corp. v. Duncan Meter Corp., 8 F.R.D. 582 (D.C. Ill., 1948) and Clark v. Chase National Bank, 45 F. Supp. 820 (D.C. NY, 1942), Rule 12(b) does permit such objection without any question, although the objection can be raised under Rule 8(c).
4. Section (b) of the Federal Rule is omitted in its entirety from Rule 17 as it is not applicable to actions in state court.
5. Section (b) of this rule is basically the same as FRCP 17(c). Omitted from the Federal Rule are all those persons designated as representatives of an infant or incompetent except a guardian. The parenthetical reference to a conservator is made necessary by Ark. Stat. Ann., Title 57, Ch. 7 (Supp. 1977). Rule 17 makes it mandatory that a guardian sue or defend as opposed to the permissive feature of FRCP 17.
6. Section (c) is not found in the Federal Rule. It is thought to be worthwhile as giving a measure of protection to prisoners who might not otherwise be protected. This section tracks superseded Ark. Stat. Ann. 27-833 (Repl. 1962). See also Rule 7.
Addition to Reporter's Notes, 2004 Amendment: - Subdivision (c), which has no counterpart in Fed. R. Civ. P. 17, has been deleted. Borrowed from a superseded statute that was part of the Civil Code of 1868, the subdivision stated that "[n]o judgment shall be rendered against a prisoner in the penitentiary until after a defense made for him by his attorney, or, if there is none, by a person appointed by the court to defend for him." Because of the elimination of subdivision (c), prisoners no longer receive special treatment with respect to default judgments. See Zardin v. Terry, 275 Ark. 452, 631 S.W.2d 285 (1982). However, the safeguards in Rule 4(d)(4) and Rule 12(a)(1) afford incarcerated persons notice, the opportunity to be heard, and the opportunity to obtain counsel. Rule 12(a)(1), as amended in 2004, provides that incarcerated persons have 60 days after service of process in which to file an answer, compared to the 20-day period for residents of the state. This differential reflects the role of prison employees in delivering the summons and complaint, as well as the likelihood that an incarcerated person will need more time than other defendants to arrange for legal representation.
Rule 18. Joinder of claims and remedies.
(a) Joinder of Claims. A party asserting a claim for relief as an original claim, counterclaim, cross-claim, or third-party claim may join, either as independent or alternate claims, as many claims, legal or equitable, as the party may have against an opposing party, provided that nothing herein shall affect the obligation of a party under Rule 13(a).
(b) Severance and Transfer.
(1) Any claim against a party may be severed and proceeded with separately.
(2) If the court determines that the action, or a particular claim, should in the interest of justice or judicial economy be heard in another division, the court may transfer it to that division.
(c) Joinder of Remedies; Fraudulent Conveyances. Whenever a claim is one heretofore cognizable only after another claim has been prosecuted to a conclusion, the two claims may be joined in a single action; but the court shall grant relief in that action only in accordance with the relative substantive rights of the parties. In particular, a plaintiff may state a claim for money and a claim to have set aside a conveyance fraudulent as to him, without first having obtained judgment establishing the claim for money.
History. Amended May 24, 2001, effective July 1, 2001
Reporter's Notes to Rule 18: - 1. Rule 18 is a modified version of FRCP 18. Its effect is to substantially change Arkansas procedural rules. Under superseded Ark. Stat. Ann. 27-1301 (Repl. 1962), joinder of claims was limited to those classes of actions specifically enumerated; however, under Rule 18, joinder of all claims is permitted, regardless of whether they are equitable or legal in nature.
2. Section (b) permits the trial court to grant a severance of joined claims or to order a transfer of a particular claim between law and chancery courts so as to do justice and facilitate the disposition of an action. This provision confers broad discretion upon the trial court in granting or denying a severance or transfer.
3. As under the Federal Rule, the joinder of claims under this rule is permissive and not mandatory. Fowler Mfg. Co. v. Gorlick, 415 F.2d 1248 (C.C.A. 9th, 1969); McConnell v. Travelers Indem. Co., 346 F. 219 (C.C.A. 5th, 1965). Also, where the joinder of claims will result in prejudice or inconvenience to the court or the parties, the court may order separate trials under Rule 42(b).
4. Section 18(c) is identical to FRCP 18(b). The specific remedy mentioned in FRCP 18(b) is illustrative only and does not limit the application of the rule to that particular remedy. Wright & Miller, Federal Practice And Procedure, Section 1591.
Addition to Reporter's Notes, 2001 Amendment: - Subdivisions (a) and (b) have been amended in light of Constitutional Amendment 80, which established the circuit courts as the "trial courts of original jurisdiction" in the state and abolished the separate chancery and probate courts.
New language in subdivision (a) authorizes joinder of claims whether "legal or equitable," as does the corresponding federal rule. Amendment 80's merger of law and equity removed any barriers to the joinder of legal and equitable claims in a single action. See Beacon Theatres, Inc. v. Westover, 359 U.S. 500, 510 (1959) ("the liberal joinder provisions of the Federal Rules ... allow legal and equitable causes to be brought and resolved in one civil action").
Previously, subdivision (b) stated that a trial court could "make appropriate orders affecting severance of claims and may transfer claims between courts of law and equity on appropriate jurisdictional grounds." This provision has been deleted because of Amendment 80 and replaced with two paragraphs.
Under new paragraph (1), which tracks the language of Rule 21, any claim "may be severed and proceeded with separately." New paragraph (2) permits the transfer of a particular claim, or the entire action, from one division of the circuit court to another "in the interest of justice or judicial economy." Administrative Order No. 14, adopted by the Supreme Court pursuant to Amendment 80, requires that the circuit judges of each judicial circuit establish five divisions in each county of the circuit: criminal, civil, juvenile, probate, and domestic relations. Creation of these divisions has no jurisdictional significance. See 2001 Reporter's Note accompanying Rule 2.
In the system contemplated by Amendment 80 and Administrative Order No. 14, severance should be employed sparingly and only when multiple claims in a single action are wholly unrelated. If the claims arise from the same transaction or occurrence, a series of transactions or occurrences, or a common nucleus of operative fact, they should not be severed and then transferred to another division of the circuit court for disposition. Severance and transfer in this situation would be at odds with the purpose of Amendment 80, which was designed to eliminate the jurisdictional lines that had forced cases to be divided artificially and litigated separately in different courts. See, e.g., Hilburn v. First State Bank, 259 Ark. 569, 535 S.W.2d 810 (1976).
Rule 19. Joinder of persons needed for just adjudication.
(a) Persons to Be Joined If Feasible. A person who is subject to service of process shall be joined as a party in the action if (1) in his absence complete relief cannot be accorded among those already parties, or, (2) he claims an interest relating to the subject of the action and is so situated that the disposition of the action in his absence may (i) as a practical matter, impair or impede his ability to protect that interest, or, (ii) leave any of the persons already parties subject to a substantial risk of incurring double, multiple or otherwise inconsistent obligations by reason of his claimed interest. If he has not been joined, the court shall order that he be made a party. If he should join as a plaintiff, but refuses to do so, he may be made a defendant; or, in a proper case, an involuntary plaintiff.
(b) Determination by Court Whenever Joinder Not Feasible. If a person as described in subdivision (a)(1)-(2) hereof cannot be made a party, the court shall determine whether in equity and good conscience the action should proceed among the parties before it, or should be dismissed, the absent person being thus regarded as indispensable. The factors to be considered by the court include: (1) to what extent a judgment rendered in the person's absence might be prejudicial to him or those already parties; (2) the extent to which, by protective provisions in the judgment, by the shaping of relief, or other measures, the prejudice can be lessened or avoided; (3) whether a judgment rendered in the person's absence will be adequate; (4) whether the plaintiff will have an adequate remedy if the action is dismissed for nonjoinder.
(c) Exception of Class Actions. This rule is subject to the provisions of Rule 23.
Reporter's Notes to Rule 19: - 1. Rule 19 deals with compulsory joinder of parties. With the exception of the omission of the last sentence of FRCP 19(a), this rule is the same as its federal counterpart. It is believed that the omitted sentence dealing with venue is unnecessary under state practice. Section 19(a) requires the person joined to be subject to service of process; therefore, the fact that such person could otherwise object to venue is of no consequence where existing defendants are properly before the court. This is the effect of Ark. Stat. Ann. 27-615 (Repl. 1962) which remains unaffected by these rules.
2. Section 19(a) concerns itself with the question of who is a "necessary" party while 19(b) deals with whether a necessary party is an indispensable party. Wright v. First National Bank, 483 F.2d 73 (C.C.A. 10th, 1973); Charon v. Meaux, 60 F.R.D. 107 (D.C. N.Y., 1973). The policy behind FRCP 19 is to avoid dismissal of actions where possible and when it is possible to join an absent party, dismissal is not proper as such party will be ordered to enter the action as a defendant or plaintiff.
3. Superseded Ark. Stat. Ann. 27-808 (Repl. 1962) provided that parties who were united in interest must be joined as plaintiffs or defendants. Superseded Ark. Stat. Ann. 27-814 (Repl. 1962) provided that where a controversy could not be resolved without prejudice to others or by preserving their rights, then the other parties had to be brought in as parties. This rule, following FRCP 19, abolishes the rigid distinctions between necessary and indispensable parties and instead places the emphasis upon the practical effects a judgment might have upon an absent party.
4. Section (c) of FRCP 19 is omitted from this rule. If there are questions as to defects in parties plaintiff, it is the Committee's view that this is more appropriately an issue which should be raised by a defendant under Rule 12(b).
5. The exception of class actions in 19(c) is for obvious reasons. Rule 23 suggests that absent class members can never be considered indispensable and it is doubtful that they can be considered necessary parties. Watson v. Branch County Bank, 380 F. Supp. 945 (D.C. Mich., 1974).
Rule 20. Permissive joinder of parties.
(a) Permissive Joinder. All persons may join in one action as plaintiffs if they assert any right to relief jointly, severally or in the alternative in respect of or arising out of the same transaction, occurrence, or series of transactions or occurrences and if any question of law or fact common to all these persons will arise in the action. All persons may be joined in one action as defendants if there is asserted against them jointly, severally, or in the alternative, any right to relief in respect of or arising out of the same transaction, occurrence, or series of transactions or occurrences and if any question of law or fact common to all defendants will arise in the action. A plaintiff or defendant need not be interested in obtaining or defending against all the relief demanded. Judgment may be given for one or more of the plaintiffs according to their respective rights to relief, and against one or more defendants according to their respective liabilities.
(b) Separate Trials. The court may make such orders as will prevent a party from being embarrassed, delayed, or put to expense by the inclusion of a party against whom he asserts no claim and who asserts no claim against him and may order separate trials or make other orders to prevent delay or prejudice.
Reporter's Notes to Rule 20: - 1. Rule 20 basically tracks prior Arkansas law. Section 20(a) is identical to superseded Ark. Stat. Ann. 27-806 (Repl. 1962) which was taken from FRCP 20. Omitted from this rule is the reference in the Federal Rule to admiralty actions; otherwise, the two sections are identical.
2. Section 20(b) is identical to superseded Ark. Stat. Ann. 27-807 (Repl. 1962) and FRCP 20(b). Overall, Rule 20 works no changes in Arkansas practice and procedure.
Rule 21. Misjoinder and non-joinder of parties.
Misjoinder of parties is not ground for dismissal of an action. Parties may be dropped or added by order of the court on motion of any party or on its own initiative at any stage of the action and upon such terms as are just. Any claim against a party may be severed and proceeded with separately.
Reporter's Notes to Rule 21: - 1. Rule 21 is identical to FRCP 21. There was no comparable provision under prior Arkansas law and a defect in parties was generally raised by demurrer where the defect appeared on the face of the complaint and by answer where the defect was not so evident. Under prior law, a defect in parties was ground for dismissal of the cause whereas under this rule, the cause is not dismissed, but rather the defect is simply cured by adding or striking parties upon motion of a party or by the court on its own motion.
2. Rule 21 should have no appreciable effect on Arkansas law. A defect in parties was non-fatal under prior Arkansas law in that it could be waived. Province v. Dean, 223 Ark. 508, 266 S.W.2d 812 (1954). A defect in parties remains non-fatal under this rule. This rule does, however, confer upon the trial court additional discretion to cure a misjoinder or non-joinder on its own motion.
Rule 22. Interpleader.
(a) Persons having claims against the plaintiff may be joined as defendants and required to interplead when their claims are such that the plaintiff is or may be exposed to double or multiple liability. It is not ground for objection to the joinder that the claims of the several claimants or the titles on which their claims depend do not have a common origin or are not identical, but are adverse to and independent of one another, or that the plaintiff avers that he is not liable in whole or in part to any or all of the claimants. A defendant exposed to similar liability may obtain such interpleader by way of cross-claim, third-party complaint or counterclaim. The provisions of this rule supplement and do not in any way limit the joinder of parties permitted in Rule 20.
(b) A plaintiff who disclaims any interest in the money or property that is the subject of the interpleader action shall, upon depositing the money or property in the registry of the court, be discharged from all liability. The court may make an award of reasonable litigation expenses, including attorneys' fees, to such a plaintiff.
History. Amended November 8, 1993, effective January 1, 1994; amended May 24, 2001, effective July 1, 2001
Reporter's Notes to Rule 22: - 1. Rule 22 is identical to FRCP 22 and does alter prior Arkansas law. Superseded Ark. Stat. Ann. 27-816 (Repl. 1962), et seq. set forth prior interpleader procedure and it is this procedure, rather than the substance of prior law which is changed by this rule.
2. Previously, upon depositing money or property into the registry of the court, a plaintiff was released from all further liability and was awarded his costs and a reasonable attorney's fee. Under this rule, as under FRCP 22, the allowance of costs and fees rests in the sound discretion of the trial court. Gulf Oil Corporation v. Oliver, 412 F.2d 938 (C.C.A. 5th, 1969).
3. Prior Arkansas law did not expressly require a deposit of the disputed funds or property into the registry of the court, but it was clear that the plaintiff could not be discharged from further liability or awarded costs and fees until he had deposited the money or property. Under this and the Federal Rule, a deposit is not a jurisdictional prerequisite, but may be required by the court in its discretion so as to safeguard the property and insure the satisfaction of a judgment. Emmco Ins. Co. v. Frankford Trust Co., 352 F. Supp. 130 (D.C. Pa., 1972). Compare, however, Miller & Miller Auctioneers, Inc. v. Murphy Industries, Inc., 472 F.2d 893 (C.C.A. 10th, 1973).
4. Prior Arkansas law required interpleader actions to be brought in chancery court. The decisions under FRCP 22 make it clear that an interpleader is equitable in nature. United Benefit Life Ins. Co. v. Leech, 326 F. Supp. 598 (D.C. Pa., 1971); Home Ins. Co. v. Moore, 499 F.2d 1202 (C.C.A. 8th, 1974). Under this rule, however, interpleader actions are not limited to courts of equity.
Addition to Reporter's Notes, 1993 Amendment: - Rule 22 is amended by adding new subdivision (b), which provides that a disinterested stakeholder - i.e., a plaintiff who disclaims any interest in the money or property - is to be discharged from liability upon depositing the money or property in the registry of the court. Further, such a disinterested stakeholder may be awarded attorneys' fees and other litigation expenses, in the discretion of the court. Subdivision (b) is based on a statute that was superseded when Rule 22 was adopted; however, the revised rule departs from the statute by making a fee award discretionary rather than mandatory. See Ark. Stat. Ann. 27-816 (Repl. 1962). Absent express authorization, a fee award is impermissible in an interpleader action, even though the stakeholder is disinterested and brings about resolution of the conflicting claims by initiating the action. See, e.g., Saunders v. Kleier, 296 Ark. 25, 751 S.W.2d 343 (1988).
Addition to Reporter's Notes, 2001 Amendment: - The word "trial," which modified "court" in the second sentence of subdivision (b), has been deleted. Constitutional Amendment 80 established the circuit courts as the "trial courts of original jurisdiction" in the state and abolished the separate chancery and probate courts.
Rule 23. Class actions.
(a) Prerequisites to Class Action. One or more members of a class may sue or be sued as representative parties on behalf of all only if (1) the class is 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 class, and (4) the representative parties and their counsel will fairly and adequately protect the interests of the class.
(b) Class Actions Maintainable. An action may be maintained as a class action if the prerequisites of subdivision (a) are satisfied, and 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. At an early practicable time after the commencement of an action brought as a class action, the court shall determine by order whether it is to be so maintained. For purposes of this subdivision, "practicable" means reasonably capable of being accomplished. An order under this section may be altered or amended at any time before the court enters final judgment. An order certifying a class action must define the class and the class claims, issues, or defenses.
(c) Notice. (1) In any class action in which monetary relief is sought, including actions for damages and restitution, the court shall direct to the members of the class the best notice practicable under the circumstances, including individual notice to all members who can be identified through reasonable effort.
(2) The notice must concisely and clearly state in plain, easily understood language:
* the nature of the action,
*
the definition of the class certified,
*
the class claims, issues, or defenses,
*
that a class member may enter an appearance and participate in person or through counsel if the member so desires,
*
that the court will exclude from the class any member who requests exclusion, stating when and how members may elect to be excluded, and
*
the binding effect of a class judgment on class members.
(3) In any class action in which no monetary relief is sought, the court may require any notice it deems appropriate in the circumstances.
(4) The cost of any notice shall be borne by the representative parties; provided, however, that the court may shift all or part of the cost to the opposing party or parties if the case is settled or the class representative substantially prevails on the merits.
(d) Orders in Conduct of Actions. In the conduct of actions to which this rule applies, the court may make appropriate orders: (1) determining the course of proceedings or prescribing measures to prevent undue repetition or complication in the presentation of evidence or argument; (2) requiring, for the protection of the members of the class or otherwise for the fair conduct of the action, that notice be given in such manner as the court may direct to some or all of the members of any step in the action, or of the proposed extent of the judgment, or of the opportunity of the members to signify whether they consider the representation fair and adequate, to intervene and present claims or defenses, or otherwise come into the action; (3) imposing conditions on the representative parties or on intervenors; (4) requiring that the pleadings be amended to eliminate therefrom allegations as to representation of absent persons, and that the action proceed accordingly; (5) dividing the class into subclasses, treating each subclass as a class, and construing and applying the provisions of this rule accordingly; and (6) dealing with similar procedural matters. The orders may be combined with an order under Rule 16 and may be altered or amended from time to time as may be desirable.
(e) Dismissal or Compromise. (1) The court must approve any settlement, voluntary dismissal, or compromise of the claims, issues, or defenses of a certified class. The court must direct notice in a reasonable manner to all class members who would be bound by a proposed settlement, voluntary dismissal, or compromise. The court may approve any such resolution that would bind class members only after a hearing and on finding that the settlement, voluntary dismissal, or compromise is fair, reasonable, and adequate.
(2) The parties seeking approval of a settlement, voluntary dismissal, or compromise must file a statement identifying any agreement made in connection with the proposed settlement, voluntary dismissal, or compromise.
(3) The court may refuse to approve a settlement unless it affords a new opportunity to request exclusion to individual class members who had an earlier opportunity to request exclusion but did not do so.
(4) Any class member may object to a proposed settlement, voluntary dismissal, or compromise that requires court approval. An objection may be withdrawn only with the court's approval.
History. Amended December 10, 1990, effective February 1, 1991; amended May 25, 2006
Reporter's Notes (as modified by the Court) to Rule 23: - 1. Class actions in Arkansas have been governed by Ark. Stat. Ann. 2-809 (Repl. 1962) which provide minimum procedural rules. This rule does not change prior law.
2. Rule 23 confers broad discretion upon the trial court to dictate such terms as are necessary to protect the rights of absent class members. This discretion is also conferred upon the federal courts by FRCP 23.
3. In Arkansas, many of the class action cases have involved actions brought by and against members of unincorporated associations such as labor unions. Thomas v. Dean, 245 Ark. 446, 432 S.W.2d 771 (1968); International Brotherhood v. Blassingame, 226 Ark. 614, 293 S.W.2d 444 (1956). See also Massey v. Rogers, 232 Ark. 110, 334 S.W.2d 664 (1960). Such actions shall henceforth be brought pursuant to Rule 23.2.
4. Under prior Arkansas law, class actions could be maintained in either law or equity. Thomas v. Dean, supra. This rule does not affect jurisdiction and thus such actions may still be maintained in either court.
Addition to Reporter's Note, 1990 Amendment: - Subdivision (a) has been completely rewritten to set out the requirements for numerosity, commonality, typicality, and adequate representation. As revised, subdivision (a) is identical to the corresponding federal rule. Former subdivision (c) has been modified slightly and redesignated as subdivision (e). Under the revised version, which is based on the corresponding federal rule, notice of a proposed dismissal or compromise is mandatory rather than discretionary. New subdivision (c) requires that the best practicable notice of the pendency of class actions seeking monetary relief, whether legal or equitable, be given to all class members. Among other things, the notice must advise class members of their right to participate in or be excluded from the litigation. When monetary relief is sought, class members must, as a matter of due process, be given such notice and afforded the opportunity to "opt out" of the class action. See Phillips Petroleum v. Shutts, 472 U.S. 797 (1985). It is not clear from Shutts whether due process requires such notice when the class action involves only injunctive or declaratory relief. Id. at 811, n. 3. Subdivision (c) does not impose such a requirement in such circumstances, but the trial court may, pursuant to subdivision (d), order that notice be given. The last sentence of subdivision (c) makes clear that the class representatives must initially bear the cost of the notice, though such cost may ultimately be shifted to the opposing parties. This practice is followed in the federal courts. See Eisen v. Carlisle and Jacquelin, 417 U.S. 156 (1974). Subdivision (d) has been revised to take into account the foregoing changes and to spell out in further detail the trial court's discretion in the management of a class action. It is virtually identical to the corresponding federal rule.
Addition to Reporter's Note, 2006 Amendment: - All parts of the Rule have been revised. Many of these changes echo recent amendments to Federal Rule of Civil Procedure 23, while others incorporate the holding of recent Arkansas decisions and current Arkansas practice. With a few exceptions, the changes are technical and do not change Arkansas law.
Another prerequisite - the adequacy of class counsel - has been added to subdivision (a). This addition conforms the Rule to Arkansas law. E.g., Mega Life & Health Insurance Co. v. Jacola, 330 Ark. 261, 275, 975 S.W.2d 898, 904 (1997). Relevant factors for the circuit court's evaluation of class counsel include: counsel's work identifying and investigating potential claims, counsel's experience in handling class actions, complex litigation, and claims of the type asserted; counsel's knowledge of the applicable law; and the resources counsel will commit to representing the class. See generally, Federal Rule of Civil Procedure 23(g). Unless a showing is made to the contrary, however, Arkansas law presumes that the class representative's counsel "will vigorously and competently pursue the litigation." USA Check Cashers of Little Rock, Inc. v. Island, 349 Ark. 71, 80, 76 S.W.3d 243, 247 (2002).
Subdivision (b) on the timing of the circuit court's certification decision has been amended. The former rule required a certification decision as soon as practicable after the lawsuit commenced. That requirement, however, neither captured the prevailing practice nor recognized the good reasons for delaying the certification decision, such as the need for limited discovery on the Rule 23(a) prerequisites. The revised Rule requires a decision on certification at an early practicable time, which is the current standard in the federal Rule. That standard gives the circuit court and the parties some flexibility, while leaving intact the settled Arkansas law that the court may not inquire into the merits at the certification stage. E.g., Speights v. Stewart Title Guaranty Co., Inc., - Ark. - , - , - S.W.3d - , - 2004 WL 1354279 (30 September 2004) (Supplemental Opinion Denying Rehearing).
The amendment deletes the phrase "may be conditional" from the part of subdivision (b) authorizing the circuit court to alter or amend a certification order. The deleted phrase is superfluous; the Arkansas cases on point have emphasized the circuit court's power to reconsider, affirm, alter, modify, or withdraw certification. E.g., Fraley v. Williams Ford Tractor and Equipment Co., 339 Ark. 322, 347, 5 S.W.3d 423, 438-39 (1999). All of these actions spring from the power to alter or amend a certification order. This change brings the Arkansas Rule back into conformity with the federal Rule.
The amendment also replaces the phrase "before the decision on the merits" in subdivision (b) with the phrase "at any time before the court enters final judgment." This change follows an amendment to the federal Rule; it better reflects the duration of the circuit court's authority to modify its certification decision; and it should give the circuit court greater flexibility to deal with developments late in the litigation but before final judgment.
A new sentence has been added to the end of subdivision (b). As the cases make plain, the certification order must define the class in sufficiently definite terms so that the court and the parties may identify the class members. E.g., Ferguson v. Kroger, 343 Ark. 627, 631-32, 37 S.W.3d 590, 593 (2001). Identifying the claims, issues, and defenses will likewise help in identifying class members and expedite the resolution of the litigation. The amendment tracks existing Arkansas law and the federal Rule. This amendment does not alter the precedent holding that the circuit court is not required to perform a rigorous analysis of the case at the certification stage. E.g., THE/FRE, Inc. v. Martin, 349 Ark. 507, 514, 78 S.W.3d 723, 727 (2002). But the circuit court must "undertake enough of an analysis to enable [the appellate court] to conduct a meaningful review." See Lenders Title Co. v. Chandler, 353 Ark. 339, 349, 107 S.W.3d 157, 162 (2003).
Subdivision (c) on notice has been rewritten and divided into subparts. The changes specify the contents of the notice in clearer terms, make a plain-statement requirement for the notice explicit, and bring the Arkansas Rule in line with the comparable federal Rule. A provision explicitly authorizing the circuit court to require notice in class actions where no monetary relief is sought has also been added. All these revisions are technical and do not change Arkansas law.
A new sentence (5) has been added to subdivision (d) to recognize the circuit court's authority to create subclasses. The Arkansas cases have assumed this authority, and implicitly approved it, for almost twenty years. E.g., Int'l Union of Ethical, Radio and Machine Workers v. Hudson, 295 Ark. 107, 117, 747 S.W.2d 81, 86-87 (1988); State Farm Fire & Casualty Co. v. Ledbetter, 355 Ark. 28, 35-36, 1295 S.W.3d 815, 820-21 (2003). The federal Rule authorizes subclasses, which are often useful. This change conforms the Rule to current Arkansas practice. Former sentence (5) has been renumbered as (6).
Subdivision (e) about dismissal and compromise has been rewritten. With some exceptions, the revised Rule restates Arkansas law in the clearer terms of Federal Rule of Civil Procedure 23(e) and incorporates current Arkansas practice. For example, proposed settlements are evaluated now for fairness, reasonableness, and adequacy. Ballard v. Martin, 349 Ark. 564, 79 S.W.3d 838 (2002). Subdivision (1) also requires the circuit court to hold a fairness hearing before approving any proposed settlement. This is a new requirement, though fairness hearings are routine in most class actions. Subdivision (2) requires the parties seeking approval of any settlement to file a statement identifying side agreements. This new requirement will promote fairness in settlements and mirrors the federal Rule. Subdivision (3) gives the circuit court discretion to open a second opt-out window if the circumstances justify it. The federal Rule contains this option, and it merely recognizes the circuit court's power to fashion all appropriate relief as part of approving any proposed settlement. Finally, subdivision (4) requires court approval before an objection may be withdrawn. Objections often can, and should be, resolved by the parties. This new requirement, also drawn from the federal Rule, will help the circuit court insure the fairness of those resolutions in light of the overall proposed settlement of the litigation.
Rule 23.1. Actions by shareholders.
In a derivative action brought by one or more shareholders or members to enforce a right of a corporation or of an unincorporated association, the corporation or association having failed to enforce a right which may properly be asserted by it, the complaint shall be verified and shall allege that the plaintiff was a shareholder or member at the time of the transaction of which he complains or that his share or membership thereafter devolved on him by operation of law. The complaint shall also allege with particularity the efforts, if any, made by the plaintiff to obtain the action he desires from the directors or comparable authority and, if necessary, from the shareholders or members, and the reasons for his failure to obtain the action or for not making the effort. The derivative action may not be maintained if it appears that the plaintiff does not fairly and adequately represent the interests of the shareholders or members similarly situated in enforcing the right of the corporation or association. The action shall not be dismissed or compromised without the approval of the court and notice of the proposed dismissal or compromise shall be given to shareholders or members in such manner as the court directs.
Reporter's Notes to Rule 23.1: - 1. Rule 23.1 is identical to FRCP 23.1.
2. Both this and FRCP 23.1 are silent concerning the "security for expenses" provision of many state business corporation acts, including that found in Ark. Stat. Ann. 64-223(c)(d) (Repl. 1962). Since the decision in Cohen v. Beneficial Industrial Loan Corporation, 337 U.S. 541, 69 S. Ct. 1221 (1949), it has generally been considered that such acts were substantive in nature and should be followed in diversity actions in federal courts. Consequently, the adoption of this rule does not supersede or repeal the "security for expenses" provision found in the Arkansas Business Corporation Act. The same is also true with regard to the matter of attorney's fees, which under Ark. Stat. Ann. 64-223 (Repl. 1962), may be awarded to either plaintiff or defendant, depending upon which prevailed in the action. See Wright & Miller, Federal Practice And Procedure, Section 1841.
3. This rule follows prior Arkansas law as found in Ark. Stat. Ann. 64-223(f) (Repl. 1962) which required court approval to dismiss or compromise a derivative action. This rule goes further, however, and requires that notice of a proposed dismissal or compromise be given to other shareholders or members in such manner as the court may direct. This is simply to afford an opportunity for other stockholders to voice objection to any proposed settlement or dismissal.
Rule 23.2. Actions relating to unincorporated associations.
An action brought by or against the members of an unincorporated association as a class by naming certain members as representative parties may be maintained only if it appears that the representative parties will fairly and adequately protect the interests of the association and its members. In the conduct of the action the court may make appropriate orders corresponding with those described in Rule 23(d), and the procedure for dismissal or compromise of the action shall correspond with that provided in Rule 23(e).
History. Amended November 11, 1991, effective January 1, 1992
Reporter's Notes to Rule 23.2: - 1. With the exception of minor wording changes, Rule 23.2 is identical to FRCP 23.2. These wording changes were necessary because of the revision of Rule 23 from FRCP 23.
2. Actions by and against members of unincorporated associations as a class have been long recognized in Arkansas. Since an association cannot sue or be sued in its own name, a class action has been the customary method of bringing suit. Baskin v. United Mine Workers of America, 150 Ark. 398, 234 S.W. 464 (1921); Smith v. Arkansas Motor Freight Lines, 214 Ark. 553, 217 S.W.2d 249 (1949).
3. Rule 23.2 should have little effect on Arkansas law. The rule simply provides safeguards to insure that absent members of the association are fully protected. This rule does not affect the principle that individual members of an association are not liable for damages. Massey v. Rogers, 232 Ark. 110, 334 S.W.2d 664 (1960).
Rule 24. Intervention.
(a) Intervention of Right. Upon timely application anyone shall be permitted to intervene in an action: (1) when a statute of this state confers an unconditional right to intervene; or (2) when the applicant claims an interest relating to the property or transaction which is the subject of the action and he is so situated that the disposition of the action may as a practical matter impair or impede his ability to protect that interest, unless the applicant's interest is adequately represented by existing parties.
(b) Permissive Intervention. Upon timely application anyone may be permitted to intervene in an action: (1) when a statute of this state confers a conditional right to intervene; or (2) when an applicant's claim or defense and the main action have a question of law or fact in common. When a party to an action relies for ground of claim or defense upon any statute or executive order administered by a federal or state governmental officer or agency or upon any regulation, order, requirement or agreement issued or made pursuant to the statute or executive order, the officer or agency upon timely application may be permitted to intervene in the action. In exercising its discretion, the court shall consider whether the intervention will unduly delay or prejudice the adjudication of the rights of the original parties.
(c) Procedure. A person desiring to intervene shall serve a motion to intervene upon the parties as provided in Rule 5. The motion shall state the grounds therefor and shall be accompanied by a pleading setting forth the claim or defense for which intervention is sought. When the constitutionality of a statute of this state affecting the public interest is drawn into question in any action, the court may require that the Attorney General of this state be notified of such question.
Reporter's Notes to Rule 24: - 1. Generally speaking, the question of whether to allow an intervention has rested in the discretion of the trial court. There are situations, however, under prior Arkansas law where an intervention has been allowed as a matter of right. Ark. Stat. Ann. 31-157 (Repl. 1962) permits a person contesting the validity of an attachment or claiming an interest in attached property to intervene to assert his rights. That statute seems to suggest that an intervention is allowed as a matter of right once the proper interest is shown in the subject matter. Lawrence v. Ford Motor Credit Co., 247 Ark. 1125, 449 S.W.2d 695 (1970). Likewise, Ark. Stat. Ann. 34-1809 (Repl. 1962), provides that upon proper showing, a party claiming an interest in property about to be sold at a partition sale can intervene in that action, with the implication that such right is unconditional. Also, Ark. Stat. Ann. 81-1340(a) (Repl. 1962), seems to suggest that a workmen's compensation carrier has the unconditional right to intervene in an action brought by an injured employee against a third party. Thus, there are at least three situations where the right to intervene is granted by statute as contemplated by Rule 24(a)(1).
2. The Arkansas Supreme Court has held that intervention is not a common law right, but is instead based upon the principle that a party should be permitted to do that voluntarily which, if known, a court would require to be done. Board of Directors of St. Francis Levee Dist. v. Raney, 190 Ark. 75, 76 S.W.2d 311 (1934). Accordingly, the court has followed the general rule that only necessary parties could intervene as a matter of right, while permitting the trial court to exercise its discretion in deciding whether others could intervene. Pulaski County Bd. of Eq. v. American Republic Life Ins. Co., 223 Ark. 124, 342 S.W.2d 660 (1961). Section (a)(2) of this rule suggests, however, that an intervention as a matter of right may not be limited to those persons who have been traditionally considered as "necessary" parties.
3. Section (b) does not appear to change to any appreciable degree prior Arkansas law concerning permissive interventions. As noted herein, the question of permitting persons other than those mentioned in Section (a) to intervene rests in the sound discretion of the trial court. Thus, Section (b), does not work any changes in prior law.
Rule 25. Substitution of parties.
(a) Death. (1) If a party dies and the claim is not thereby extinguished, the Court may order substitution of the proper parties. The motion for substitution may be made by any party or by the successors or representatives of the deceased party, and such substitution may be ordered without notice or upon such notice as the Court may require. Unless the motion for substitution is made not later than ninety (90) days after the death is suggested upon the record by the service upon the parties of a statement of the fact of death, the action may be dismissed as to the deceased party.
(2) Upon the death of a plaintiff the proper party for substitution shall be his personal representative or, where the claim has passed to his heirs or to his devisees, the heirs or devisees may be substituted for the deceased party. Upon the death of a defendant in an action wherein the claim survives against his personal representative, the personal representative shall be the proper party for substitution. Except in an action for the recovery of real property only, or for the adjudication of an interest therein, the heirs, devisees or personal representative may be the proper parties for substitution as the Court may determine. Where the deceased party is acting in the capacity as personal representative, his successor shall be the proper party for substitution.
(3) Upon the death of any party the Court before which such litigation is pending may, upon the motion of any party, appoint a special administrator who shall be substituted for the deceased party. The powers of such special administrator shall extend only to the prosecution and defense of the litigation wherein he is appointed. No special administrator shall be appointed where there is a general personal representative subject to the jurisdiction of the Court for the deceased party. Where such a general personal representative qualifies after the appointment of a special administrator, the general personal representative shall, upon the motion of any party, or the general personal representative, be substituted for such special administrator. Costs taxed against a special administrator shall not constitute a personal obligation.
(4) In the event of the death of one or more of the plaintiffs or one or more of the defendants in an action in which the right sought to be enforced survives only to the surviving plaintiffs or only against the surviving defendants, the action does not abate. The death shall be suggested upon the record and the action shall proceed in favor of or against the surviving parties.
(b) Guardians. If a plenary, limited or temporary guardian is appointed for a party, the court shall upon such terms as it considers just and upon motion of a party or the guardian allow the guardian to be substituted to the extent of his judiciary capacity, for the party for whom the guardian has been appointed.
(c) Transfer of Interest. In the case of any transfer of interest, the action may be continued by or against the original party, unless the Court upon motion directs the person to whom the interest is transferred to be substituted in the action or joined with the original party. Service of this motion shall be made as provided in subdivision (a) of this rule.
(d) Public Officers; Death or Separation from Office. (1) When a public officer is a party to an action in his official capacity and during its pendency dies, resigns, or otherwise ceases to hold office, the action does not abate and his successor is automatically substituted as a party. Proceedings following the substitution shall be in the name of the substituted party, but any misnomer not affecting the substantial rights of the parties shall be disregarded. An order of the substitution may be entered at any time, but the omission to enter such an order shall not affect the substitution.
(2) When a public officer sues or is sued in his official capacity, he may be described as a party by his official title rather than by name; but the Court may require his name to be added.
(e) Limitation of Rule. The provisions of this rule shall in no way allow a claim to be maintained which is otherwise barred by limitations or non-claim, nor shall the provisions of this rule be determinative of whether or not a claim for or against a deceased party survives his death.
History. Amended July 9, 1984, effective September 1, 1984
Reporter's Notes to Rule 25: - 1. Section (a)(1) is modified from FRCP 25(a) so as to allow, with or without notice, the substitution of parties in the event of the death of a party. This change is predicated upon the assumption that the trial court can best determine whether the substitution is essentially a routine clerical matter or whether it should be allowed only after a hearing. This section is further modified from the Federal Rule by changing the word "may" for "shall" in the last sentence so as to afford the trial court some discretion in deciding whether to dismiss an action.
2. Section (a)(2) represents an attempt to identify the proper parties for substitution on the death of a party and to condense superseded Ark. Stat. Ann. 27-1003, 27-1012, 27-1013 and 27-1014 (Repl. 1962). The purpose of this rule is to permit the action to be prosecuted by or against those who are, following the death of a party, either the real party in interest or representative thereof.
3. Section (a)(3) empowers the trial court to appoint a special administrator for a deceased party in litigation pending before it. This basically tracks the provisions contained in superseded Ark. Stat. Ann. 27-1009 through 27-1011 (Repl. 1962).
4. Section (e) represents an attempt to limit the effect of this rule to the determination of who may be substituted and not to enlarge the time during which a claim may be prosecuted. Neither does it determine which claims survive the death of a party. Specifically, Ark. Stat. Ann. 27-901 through 27-910 (Repl. 1962), remain unaffected by Rule 25.
Additions to Reporter's Notes, 1984 Amendments: - Rule 25(b) is amended to make it compatible with the Limited Guardianship Act and Rule 4(d)(1) and (3). The purpose of providing for substitution of a guardian only "to the extent of his judiciary capacity" is to permit the individual to remain a party in cases in which issues in excess of the guardian's capacity are to be decided.