I hope everyone had a good Martin Luther King Day. Given the holiday, it seemed appropriate to highlight another classic case: Hansberry v. Lee.
Oddly, given its importance to class actions litigation, Hansberry is not a class action itself. The case arose out of a restrictive covenant barring African-Americans from buying land in certain areas of Chicago. The Hansberries, an African-America family (which included future Raisin in the Sun playwright Lorraine Hansberry) moved into a neighborhood governed by the covenant. The Lees sued, arguing that 95% of the homeowners in the neighborhood had signed the restrictive covenant. The Hansberries challenged the 95% number. When the Lees argued that the fact was res judicata from another suit (Burke v. Kleiman, 277 Ill. App. 519.), the Hansberries replied that they had not been parties to that lawsuit. The Illinois Supreme Court held that the Burke case was a class action, and so the Hansberries should be bound by its ruling. The Hansberries appealed to the US Supreme Court.
The Supreme Court began its opinion by reasoning that
It is a principle of general application in Anglo-American jurisprudence that one is not bound by a judgment in personam in a litigation in which he is not designated as a party or to which he has not been made a party by service of process. A judgment rendered in such circumstances is not entitled to the full faith and credit which the Constitution and statute of the United States, and judicial action enforcing it against the person or property of the absent party is not that due process which the Fifth and Fourteenth Amendments require.
(Internal citations omitted.) The only exception the Court identified was the emerging equitable doctrine allowing for class lawsuits. And, since the Illinois Supreme Court had called Burke a class action, the Court asked just what makes a class action binding on subsequent parties.
It is familiar doctrine of the federal courts that members of a class not present as parties to the litigation may be bound by the judgment where they are in fact adequately represented by parties who are present, or where they actually participate in the conduct of the litigation in which members of the class are present as parties, or where the interest of the members of the class, some of whom are present as parties, is joint, or where for any other reason the relationship between the parties present and those who are absent is such as legally to entitle the former to stand in judgment for the latter.
(Internal citations omitted.) Given those criteria, the Court held that Burke did not constitute a class for litigation purposes.
It is one thing to say that some members of a class may represent other members in a litigation where the sole and common interest of the class in the litigation, is either to assert a common right or to challenge an asserted obligation. It is quite another to hold that all those who are free alternatively either to assert rights or to challenge them are of a single class, so that any group, merely because it is of the class so constituted, may be deemed adequately to represent any others of the class in litigating their interests in either alternative. Such a selection of representatives for purposes of litigation, whose substantial interests are not necessarily or even probably the same as those whom they are deemed to represent, does not afford that protection to absent parties which due process requires.
(Emphasis added, internal citations omitted.) So what can class action defense lawyers take from this case? The purpose of the adequacy requirement is to ensure that the class has been represented well enough that it may be bound by the judgment. Plaintiffs’ lawyers–and plaintiffs–often lose sight of that purpose; instead they argue that adequacy is satisfied so long as there are no glaring conflicts. But that’s not the case. Adequacy requires a searching inquiry because that is the best way to protect the interests of the class.