Rule 23.2 - Actions on Behalf of or Against the Members of an Association Without Separate Legal Existence(a) Actions on Behalf of the Members of an Association.(1) Despite Rule 23, a person may sue for the members of an association if the person is: (A) a member of the association; and(B) capable of adequately representing the interests of the association and its members.(2) Despite Rule 9(a), the complaint must allege the capacity in which the person is suing for the members of the association and facts sufficient to satisfy Rule 23.2(a)(1).(3) Despite Rules 10(a) and 17(a), the caption must name the association as a nominal plaintiff and may name the member suing.(b) Actions Against the Members of an Association.(1) Despite Rule 23, a plaintiff may sue the members of an association by naming a person as a defendant who is: (A) a member of the association; and(B) capable of adequately representing the interests of the association and its members.(2) Despite Rule 9(a), the complaint must allege the capacity in which each person is named as a defendant and facts sufficient to satisfy Rule 23.2(b)(1).(3) Despite Rule 10(a) and 17(a), the caption must name the association as a nominal defendant and may name the member being sued.(c) Determination of Adequacy; Notice; Dismissal for Inadequacy; Disputes Among Members.(1)Determination of Adequacy. A determination that a person is a member and can adequately represent the interests of the association and its members must be made by order. The order may be altered or amended before final judgment.(2)Notice. Except for cause, the Court must direct appropriate notice of the action to the association and all of its members.(3)Dismissal for Inadequacy. If only one person has sued or been named as a defendant and if the person cannot adequately represent the interests of the association and its members, then the Court must dismiss the action without prejudice. But an alternative plaintiff may move to intervene within 60 days and continue the action.(4)Disputes Among Members as to Litigation. The Court may resolve any dispute among members regarding the conduct of the litigation by applying the rules of the association. If the Court cannot resolve the dispute by applying the rules of the association, then the action cannot proceed under this rule. It must comply with Rule 23.(d) Conduct of the Action. In conducting the action, the Court may issue any orders contemplated by Rule 23(e).(e) Dismissal or Settlement.(1)In General. An action under this rule may be dismissed or settled only if the Court approves the terms of the proposed dismissal or settlement.(2)Required Submissions. (A) The parties submitting a proposed dismissal must file a form of order stating the terms on which the action will be dismissed; and(B) The parties submitting a proposed settlement must file the definitive agreement governing the settlement.(3)Notice. Except for cause, the Court must direct appropriate notice of the proposed dismissal or settlement to the association and all of its members. The parties must provide the Court with information sufficient to rule on whether to require notice and in what form.(4)Objections. (A)In General. Any member of the association may object to the proposed dismissal or settlement. The objection must state with specificity the grounds for the objection and its purpose. The objection must state whether it applies only to the objector, to a specific subset of the members of the association, or to all members.(B)Court Approval Required for Payment in Connection with an Objection. Unless approved by the Court after a hearing, no payment or other consideration may be provided in connection with:(i) forgoing or withdrawing an objection, or(ii) forgoing, dismissing, or abandoning an appeal from the judgment approving the proposed dismissal or settlement.(5)Approval of the Proposal. If the proposed dismissal or settlement will bind the members of the association, the Court may approve it only after a hearing and only on finding that it is reasonable after considering whether: (A) the interests of the association and its members were adequately represented;(B) adequate notice of the hearing was provided;(C) the proposed dismissal or settlement was negotiated at arm's length;(D) the relief provided falls within a range of reasonableness, taking into account:(i) the strength of the claims;(ii) the costs, risks, and delay of trial and appeal;(iii) the scope of the release; and(iv) any objections to the proposed dismissal or settlement.(f) Attorney's Fees, Expenses, and Member Awards. The procedure for any application for an award of attorney's fees, expenses, or an award to a member who represented the interests of the association and its members, must correspond with the procedure in Rule 23(g).(g) Definitions. For Rule 23.2: (1) "association" means a collective organization of persons who have united together for some purpose or business but without forming an entity with a separate legal existence; and(2) "member" means a person who belongs to or acts as part of an association.Amended September 25, 2023, effective 9/25/2023.Comment
In 2023, the Court of Chancery Rules were revised as part of an effort to align them with the Federal Rules of Civil Procedure. Rule 23.2 is an exception. It was revised in its entirety.
Prior Rule 23.2 and existing Federal Rule of Civil Procedure 23.2 address suits on behalf of or against the members of an unincorporated association. Rule 23.2 provides a simplified, quasi-class action vehicle for suits on behalf of or against the members of an unincorporated association. It uses procedures modeled on Rule 23.
The revision does not affect the ability of members of an association to sue as plaintiffs individually, nor the ability of a party to sue members of an association as defendants individually.