Rule 23.08 Disposition of Residual Funds

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 § 48-718 [repealed] contains the provisions of the General Corporation Act relating to shareholders' derivative suits.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 § 48-718 [repealed] and will not repeal any of its provisions.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.

Advisory Commission Comments [2025].

The prior rule allowed complete discretion to use residual funds for any purpose whatsoever, with only a notation that use for indigent representation was permitted. The prevailing view among legal scholars and courts is that use of residual funds should target some combination of programs that advance the class members’ interests and/or programs that advance access to justice for indigent citizens. Some jurisdictions direct that residual funds should be used exclusively for the interests of the class members and only for indigent representation purposes if advancing the class members’ interests is not feasible. See generally Me. R. Civ. P. 23(f)(2). Many jurisdictions direct that a prescribed percentage of the funds should be used to provide legal help to indigent persons, with the remainder paid to organizations that reflect the class’s interests. See generally S.C. R. Civ. P. 23(e)(2) (minimum 50% to access to civil justice activities or programs).