Debates over class actions have often been compared to a war.
This war centers on class actions for monetary relief, which aggregate many damages claims into a single lawsuit.
One side defends such class actions as a tool for providing access to justice and keeping the powerful in check.
The other side accuses them of enabling meritless litigation and bleeding money from corporations.
This war is fought on many fronts. Some question whether it is desirable, or even constitutional, for class actions to be binding upon class members without their express consent.
Others argue that class action plaintiff’s attorneys are subject to distorted incentives that cause them to litigate too aggressively,
or perhaps to settle too cheaply.
The much-contested certification requirements of Federal Rule of Civil Procedure 23 (Rule 23) have been subject to renewed scrutiny under the Roberts Court.
The class action war is now fifty years old.
Class actions have been debated endlessly, and many of the same themes have reverberated through the decades. Disagreements between the two sides are as heated as ever. Class actions have often proven resilient, and they have often been slow to change. Yet they have changed, and recently they have been changing fast. It now appears that the class action war has reached an important new juncture.
Over the past decade, proponents of class actions have decidedly been put on the defensive. In a line of cases beginning with AT&T Mobility LLC v. Concepcion, the Supreme Court has held that contractual agreements requiring individual arbitration are protected under the Federal Arbitration Act of 1925.
Arbitration, an alternative to traditional litigation, is an informal and nonjudicial means of resolving disputes. In individual arbitration, a single claimant seeks redress for themselves, without anyone else being represented in the proceeding or bound by the outcome. Arbitration is relatively uncontroversial when the parties agree to it after the dispute arises, mutually availing themselves of a forum that may be cheaper, faster, or more tailored to the dispute than litigation in court.
But it is increasingly common for corporations to include provisions requiring individual arbitration in employment and consumer contracts, and for people to sign away the right to litigate in court before disputes arise.
Most people do not, and probably could not, bargain out of mandatory arbitration agreements, so there are few checks on their proliferation.
Given that most people bound by mandatory arbitration agreements cannot take part in class actions, there are likely to be fewer class actions wherever such agreements proliferate.
Proponents of class actions have called on Congress to intervene, recognizing that class actions are in peril if Congress does nothing.
Congress must decide whether class actions are worth saving.
But class action legislation is mired in partisan division. Democrats wish to preserve class actions, as demonstrated by the Forced Arbitration Injustice Repeal Act (FAIR Act), a bill that would render unenforceable any contractual agreements that bar class litigation of employment, consumer, antitrust, and civil rights disputes.
The FAIR Act was passed by a Democratic-controlled House of Representatives in September 2019, but it never became law.
By contrast, Republicans would weaken class actions further: In March 2017, a Republican-controlled House of Representatives passed the Fairness in Class Action Litigation Act (Fairness Act), a bill that would significantly restrict class actions.
Like the FAIR act, the Fairness Act never became law.
Class actions remain a live and urgent issue, with Democrats and Republicans rallied around opposing visions of reform. Even while Democrats control both houses of Congress and the presidency, their proposals are unlikely to become law due to the prospect of a Senate filibuster and possible dissent from conservative Democratic senators.
A path to compromise is needed if any reforms are to pass.
This Note explains that class actions are so contentious in part because of disagreements over what goals they are supposed to serve.
To assist in understanding these disagreements, this Note proposes a taxonomy of the goals of class actions. It first identifies two broad justifications for class actions: One justification is that class actions make litigation more efficient; the other justification is that class actions expand representation in litigation. In this Note’s taxonomy, each of these two broad justifications is associated with two goals. Under the efficiency justification, one goal of class actions is to benefit plaintiffs by allowing them to save on the transactional costs of litigation, thereby increasing their net compensation;
the other goal is to benefit the public by increasing monetary deterrence against wrongdoing.
Under the representation justification, one goal of class actions is to benefit plaintiffs by including more of them in litigation;
the other goal is to benefit the public by giving rise to new and qualitatively different lawsuits that have outsized influence over laws and norms.
This Note observes that there is a tension between the two efficiency goals and the two representation goals. Efficiency goals are best furthered by the inclusion of more valuable claims in class actions while representation goals are best furthered by the inclusion of more claimants in class actions.
Using this taxonomy, this Note examines the current views of Republicans and Democrats through an analysis of the Fairness Act and the FAIR Act. This analysis shows that Republicans believe only in the goal of compensation while Democrats believe in the goals of providing access to justice and shaping laws and norms. This difference in views reveals two cleavages between Republicans and Democrats. One cleavage is that Republicans do not believe class actions serve any public purpose, whereas Democrats do. The other cleavage, which this Note identifies as being deeper and more fundamental, is that Republicans align with the efficiency justification while Democrats align with the representation justification. These two views of class actions shape the current political debate—and political impasse—over class actions and mandatory arbitration agreements.
Despite these divisions, this Note argues that the goals of class actions are not inherently in conflict with one another and that political compromise is possible. If the efficiency goals and the representation goals were diametrically opposed, it would be difficult to see how the class action war could ever end. One side might achieve a particular legislative victory, but, if the past fifty years are any indication, the concerns of the opposing side would always reestablish themselves. Indeed, one might expect the class action war to continue for another fifty years. This Note rejects that vision and offers a path toward reconciling these goals. The approach advanced by this Note considers efficiency and representation to be equally important justifications for class actions, avoiding the typical notion that one predominates over the other. Instead, this Note presents a framework for distinguishing between those class actions that primarily serve efficiency goals and those class actions that primarily serve representation goals. This framework conceptually reconciles the goals of class actions and can guide courts toward a more expansive understanding of the policy interests behind class actions. Moreover, this Note argues that this reconciled understanding of class actions offers a path toward crafting legislative compromises that may be reasonably palatable to both Republicans and Democrats.
This Note proceeds in three Parts. Part I explains the goals of class actions, reviewing their historical context and describing their theoretical underpinnings. Part II explains that different views of the goals of class actions are motivating opposing Republican and Democratic legislative proposals related to class actions, as exemplified by the Fairness Act of 2017 and the FAIR Act of 2019. Part III proposes a framework for reconciling the goals of class actions and offers examples of legislative compromises that can be built on this reconciled understanding.