Over the last ten days, Judge Baer issued a followup order in the Gildan Activewear case and gave an interview to the New York Law Journal discussing his reasoning. The order–which found both plaintiffs’ firms to be adequate, and stressed that it was not criticizing their hiring practices–was pretty much a non-event. But Judge Baer’s interview–in which he reaffirmed his belief that he has both the power and the responsibility to review a firm’s diversity in discharging his Rule 23(f) function, has led to additional blog commentary. My own opinion on whether he can do so (probably yes) and whether he should (depends entirely on your conceptions of the proper role of government and preferences for disadvantaged minorities) hasn’t changed. But the more I read about the reactions from both self-identified conservatives and liberals to Judge Baer’s order, the more I become convinced that it may be a foreseeable, if unintended, consequence of using "public case" arguments to justify filing and certifying class actions.
The federal government does employ–with strict limts–some minority preferences in federal contracting. And, if one makes the argument (as academics like Brian Fitzpatrick and Myriam Gilles and plaintiffs’ lawyers like Elizabeth Cabreser and Steve Berman do) that a class action is really a case on behalf of the public at large for deterring corporate misconduct, it’s not a great stretch to see a securities class action as a contract from the federal judiciary (or public pension fund) to prosecute a case for the public good. (That may be why one tactic for recruiting institutional named plaintiffs–"pay to play"–bears the same name as a major concern for government regulation.)
Am I saying that class-action lawyers should be subject to minority-contracting rules? Most emphatically not. What I am saying is that rhetoric can have real-world consequences. In this case, if plaintiffs’ lawyers successfully convince judges that they are quasi-public servants, they may find themselves being regulated much like public servants.