RULE 23. CLASS ACTIONS

218

Rule 23.08: Disposition of Residual Funds.

Any order entering a judgment or approving a proposed compromise of a class action certified under this rule may provide for the disbursement of residual funds. Residual funds are funds that remain after the payment of all approved: class member claims, expenses, litigation costs, attorneys' fees, and other court-approved disbursements to implement the relief granted. Nothing in this rule is intended to limit the parties to a class action from suggesting, or the trial court from approving, a settlement or order entering a judgment that does not create residual funds.

It shall be within the discretion of the court to approve the timing and method of distribution of residual funds and to approve the recipient(s) of residual funds. A distribution of residual funds to a program or fund which serves the pro bono legal needs of Tennesseans including, but not limited to, the Tennessee Voluntary Fund for Indigent Civil Representation is permissable but not required.

Upon motion of any party to a settlement or judgment of a class action certified under this rule or upon the court's own initiative, orders may be entered after an approved settlement or judgment to address the disposition and disbursement of residual funds in a manner consistent with this rule.

Advisory Commission Comments.

Rule 23 makes the class action available in all fields of civil litigation. The court is required to make an affirmative determination as to whether or not a class action is proper in any given set of circumstances; this determination is subject to alteration at any time prior to judgment on the merits. Criteria governing the court's determination are spelled out in detail. The rule seeks to secure to the courts and litigants the advantages of the class action while clothing the court with power to protect all members of the class against a miscarriage of justice.

23.06: Tenn. Code Ann. § 48-718 [repealed] contains the provisions of the General Corporation Act relating to shareholders' derivative suits. Rule 23.06 does not conflict with the provisions of Tenn. Code Ann. § 48-718 [repealed] and will not repeal any of its provisions. The Rule adds a provision, not found in the statute, requiring that the complaint contain an allegation that plaintiff is a holder of shares at the time of bringing the suit, but the Rule does not change the requirement that the plaintiff actually be a shareholder as of that time. The Rule adds a requirement that the complaint set out the reasons that plaintiff's efforts to obtain desired action from the directors or comparable authority were unsuccessful. The Rule adds a provision that 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.

Advisory Commission Comments [2004].

The amendment to Rule 23.03(1) abolishes ex parte class action certifications.

Advisory Commission Comments [2006].

The second and third sentences of Rule 23.05 are new. Objections can be made to attorney fees sought as part of a settlement.

Advisory Commission Comments [2007].

T.C.A. §27-1-125 gives the Court of Appeals discretion to permit an appeal of a trial court's grant or denial of class action certification. Permission from the trial court is unnecessary.

Advisory Commission Comments [2009].

The Tennessee Voluntary Fund for Indigent Civil Representation is established in Tenn. Code Ann. § 16-3-821.

Back to Top