Federal Rule of Bankruptcy Procedure 7023 states that Rule 23 applies to adversary proceedings, allowing class actions to be filed in bankruptcy court. I used to work on bankruptcy-court class actions when I was at Severson. The proceedings are essentially the same, although I found that most bankruptcy judges were somewhat less familiar with class action procedures than district court judges, so more careful briefing on the basic elements was often helpful. In Gregory v. Finova Capital Corp., ___ F.3d ___ (4th Cir. Mar. 14, 2006), the unsecured creditors took advantage of Rule 7023 and filed a putative class action as an adversary proceeding against a third party who they alleged breached a duty to the debtor. That same third party had already been sued in district court for the same alleged misconduct, and the district court granted class certification without regard to the pending adversary proceeding. The Fourth Circuit reversed, holding that an adversary proceeding already pending in bankruptcy court was the "superior" way to resolve the dispute, because in that particular case, the bankruptcy court would need to adjudicate the same issues "in the normal course of [the debtor's] bankruptcy." Slip op. at 6.
And in another interesting decision, the Seventh Circuit held that unnamed class members need not exhaust their administrative remedies to be part of the class. In re Household Int'l Tax Reduction Plan, ___ F.3d ___ (7th Cir. Mar. 20, 2006). While the case was decided in the context of ERISA, it contains language more broadly applicable to other types of cases (absent a statute to the contrary): "If the complaint or subsequent filings adequately identify the class members' claims and demonstrate that they are indeed very similar to those of the named plaintiff, the defendant knows what he is facing and can make efforts to settle the full array of claims. In such a case, requiring exhaustion by the individual class members would merely produce an avalanche of duplicative proceedings and accidental forfeitures, so is not required." Slip op. at 3.
Both of these cases came to my attention via the blog Federal Civil Practice Bulletin, a must-read for those of us enamored of federal civil procedure.