Thank you for sharing!

Your article was successfully shared with the contacts you provided.
In principle, the economic case for class actions looks unassailable. Class actions allow our legal system to contend with the many small, but complex, claims dominated by common issues. Individuals often can’t afford to bring the suits that class aggregations make feasible. With a single blow, a class action deters the defendant and compensates the plaintiff. While individual claimants lose control over their cases, they gain a larger net return. And for personal injury claims, Federal Rule of Civil Procedure 23 preserves individual opt-out rights, which are often exercised if weak counsel is selected as class representative. Rule 23 bundles efficiency, equity and deterrence in one tidy package. Why then the rising discontent? A good idea in theory can become a bad idea in practice. First, the system is expensive. Procedural battles over class certification, class representatives and class notice are easy to underestimate in the abstract. Second, even large defendants blink in the thankless game of “you bet your company” where the stakes make settlement a moral imperative. Third, and more subtle, class actions magnify any errors � and there can be lots � that creep into the substantive law. Rule 23 was adopted in 1966 just before the huge expansion of statutory and common law liability. The humble class action dealing with multiple personal injuries arising out of a single bus crash morphed into exotic suits with thousands of complex claims involving drugs, medical devices, securities, discrimination and the like. Judicial desire to provide a mass vehicle for these new claims has in turn covertly expanded the substantive law. Consider the tasks of proving the element of reliance in misrepresentation cases or allowing setoffs in overcharge cases. They present powerful obstacles to aggregating individual suits. The patterns of interaction that lead individuals to buy a security, a cigarette or a drug are manifestly separate issues that undercut the predominance requirement of Rule 23(b)(3). Ditto with setoffs in refund cases brought under consumer fraud statutes for benefits conferred by a recalled product. Some judges hold that if the law in one case raises a certain set of issues, that fragmentation of issues militates against certifying a nationwide class, or perhaps any class at all. But other judges knock out either reliance or setoffs to make sure common issues predominate. The aggregation of individual claims thus distorts underlying substantive law, as procedure dominates substance � rather than the reverse. Judicial Forks in the Road The differences in attitude cut deep, and they matter; class lawyers often have broad latitude as to forum, and sympathetic courts become magnets for suits. Our federalist system magnifies the problem. Federal cases are subject to multidistrict consolidation. But federal panels have no control over state class actions. Defendants often fight a multiple-front war, trapped in state proceedings until a final judgment in the federal case. The want of coordination often leads to the pursuit of inconsistent theories, as when two distinct plaintiffs claim the exclusive right to a single refund. Litigation thus may turn on whether a federal judge moves quickly enough to stop the shenanigans in bellwether jurisdictions. The overall class action system is in an acute state of distress even assuming the highest level of professionalism of 99 percent of our judges. While the excesses of class actions are abundant, there are also concerns about injustices and inefficiencies that cut against plaintiffs. The absence of clear “ownership” of class actions gives an astute defendant the opportunity to shop a meritorious case until it finds a compliant partner with whom to make a settlement that precludes other viable class actions in the midst of litigation. The second law firm may be amenable to a smaller take of a smaller pie because it has done less work. The upshot is that class members (and other class counsel) are done in by these strategic settlements, reached after defendants conduct a so-called reverse auction. The diagnosis of multiple pathologies seems easy, but reform is hard because the overall malaise has multiple causes � substantive and procedural. Prying cases from problem jurisdictions is a promising path; opening the doors of the federal courts is, on balance, another good idea; and thinking hard about eliminating class actions where fines or other administrative actions would suffice is a third. All are partial fixes that will meet fierce political opposition. But hard as reform may be, even one $10 billion judgment for some trivial violation of consumer protection laws should give us breathless pause. Epstein is the James Parker Hall Distinguished Service Professor of Law at the University of Chicago Law School and a senior fellow at the Hoover Institution of Stanford, Calif.

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Advance® Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]

Reprints & Licensing
Mentioned in a Law.com story?

License our industry-leading legal content to extend your thought leadership and build your brand.


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.