Robert Klonoff, Dean of the Lewis & Clark Law School, has produced a new article, The Decline of Class Actions (forthcoming from the Washington University Law Review), that provides a much-appreciated overview of recent developments in class action law from a plaintiff’s perspective. (Disclosure: Dean Klonoff provided a very nice blurb for the Class Action Playbook.) Regular readers of this blog know that I am actually a big fan of plaintiffs’ perspectives: I think understanding them is crucial to a conscientious and seals defense of class action litigation. And while there is much to like in Dean Klonoff’s analysis, there is also a fair amount that is lost to the same old pro-plaintiff analysis that many courts have begun to reject.
Unlike a number of his scholarly colleagues, Dean Klonoff doesn’t say that the class action is dead, just that courts have made it a lot harder to get a class certified, and that he considers that a problem. He traces that problem to a number of the "new" requirements that courts have imposed on class-action plaintiffs in the last decade. What are those new requirements? Well, they’ll look familiar to readers of Rule 23.
Rigorous analysis. Dean Klonoff worries that courts now require too much evidence from plaintiffs at the certification stage. Some of his concerns have some actual foundation (a number of practitioners, both plaintiff and defense, have noted that the increased focus on rigorous analysis has shifted costs toward the beginning of the case for both sides, a result necessarily in tension with the efficiency arguments for class certification). But others betray an ignorance of how lawyers actually litigate cases. For example, he expresses concern that:
While courts have imposed strict new evidentiary burdens on plaintiffs, they have increasingly permitted defendants to seek denial of class certification without submitting to discovery. For instance, in Pilgrim v. Universal Health Card, LLC, the Sixth Circuit upheld the district court’s dismissal of class allegations in a nationwide class action, reasoning that “we cannot see how discovery or for that matter more time would have helped [plaintiffs].” Other courts have taken this approach as well. Case law requiring plaintiffs to put forward exacting evidentiary proof in support of class certification is difficult to square with case law permitting defendants to move to strike class allegations without allowing plaintiffs even minimal discovery.
In fact, it is easy to square these two requirements. The plaintiff bears the burden of providing the court with an adequate basis for certifying a class. LIke with any burden, that means that ties go to the other party (in this case, the defendant). If the plaintiff has pled a class action that can’t be certified because of an insurmountable legal defect, there is no reason to engage in discovery that cannot cure that defect. This is the exact same reason that we require a plaintiff both to prove her case by a preponderance of the evidence, but also allow the defendant to file a motion to dismiss.
More importantly, Dean Klonoff does not address the actual new requirement imposed by Rule 23(c)(1)(B), which requires a detailed order from courts certifying a class. Without actual evidence from plaintiffs, courts will find it hard to meet this new requirement.
Interestingly, Dean Klonoff does think that courts should resolve Daubert questions before certification, because they are about the admissibility of evidence, rather than proof of the merits.
Ascertainability. Dean Klonoff also worries about courts’ increased focus on the viability of class definitions.
Indeed, the trend of more exacting scrutiny of class definitions has been recognized by one of the nation’s leading class action defense attorneys, John Beisner. In a recent article, Beisner noted that “more and more decisions are turning on the requirement of an ascertainable class definition.” He thus urged class action defense counsel to look for ways to challenge the class definition.
(Internal footnotes omitted.) According to Klonoff, a "more measured" approach would be to allow the plaintiffs to amend their class definition whenever it is challenged. And, in many cases, that is exactly what a court will do. But sometimes amending a class definition is simply futile: if there is no common issue uniting the class, then any definition will be either overbroad or impermissibly merits-based.
Numerosity. Dean Klonoff has identified an important trend here. Prompted by a need for a more rigorous analysis, courts have expanded their analysis of numerosity. In particular, they have begun to question the assumptions plaintiffs make, and to look at the effect that geographic dispersion may have.
Although the case law is conflicting, plaintiffs are nonetheless at risk of losing on class certification if their numerosity argument is based on inference or on appeal to common sense. The strict approach adopted by some courts represents yet another troublesome trend. Indeed, the large number of successful challenges to numerosity—which was once the least demanding requirement of Rule 23(a)—is one of the most dramatic recent developments.
(Emphasis added.) Both plaintiffs and defense can benefit from a greater understanding of this development.
Commonality. Not surprisingly, given his overall thesis, Dean Klonoff believes that the Supreme Court erred in its holding in Dukes. As he puts it:
The majority decision in Dukes cannot be squared with the text, structure, or history of Rule 23(a)(2). Nothing in the text of Rule 23(a)(2), or in the Advisory Committee Notes thereto, requires that the common question be central to the outcome. Instead of looking at the traditional methods of interpreting Rule 23(a)(2), the majority relied heavily on a law review article by Professor Nagareda.
Dean Klonoff also questions whether Nagareda was really writing about commonality, even though Nagareda makes makes it clear that he is referring to common questions in Rule 23 a number of times (both Rule 23(a)(2) and 23(b)(3) use the same term; it makes sense they would mean the same thing). This begs the question: Why would you want to certify a class where the common question was not central to the outcome of the case? This, unfortunately, is not a question he answers. (Dean Klonoff does raise another interesting question, which is whether the use of the term "common question" in Rule 23 is the same as in Rules 20 and 42.)
Adequacy. After pointing out that he actually supports a more stringent adequacy requirement in general, Dean Klonoff argues that adequacy should not encompass claim-splitting.
There is, however, a disturbing trend in “adequacy” jurisprudence. That case law focuses not on the ability of class representatives and counsel to vigorously represent the class, but on counsel’s selection of the causes of action to assert. The argument is that, by not bringing all potentially viable claims, the representatives and counsel have (1) impermissibly “split” claims, thereby prohibiting class members (pursuant to res judicata) from later bringing those omitted claims, or (2) subjected class members to the risk that collateral estoppel could essentially nullify their remaining (unfiled) claims.
(Internal footnote omitted.) Dean Klonoff’s solution is simply to have courts state that collateral estoppel shall not apply to claims that could have been raised, but were not for strategic reasons. This is a disturbing suggestion on several levels, not least of which is that it undermines the balance that justifies class aggregation, that of the right to individual trials on the one hand, and the need for global resolution–for plaintiff or defendant–on the other.
Other Issues. Dean Klonoff also worries that plaintiffs cannot use Rule 23(b)(2) strategically to certify money damages classes that would not qualify under Rule 23(b)(3), and that courts have clamped down on fraud and multi-state class actions (the former because reliance is very difficult to prove on a classwide basis, the latter because plaintiffs have not offered any viable methods of certifying a nationwide class). He believes that these constitute "per se" rules against certification.
Klonoff doesn’t have much practical advice for lawyers, instead he advocates forum-shopping to find more receptive circuits. (He recommends the Second, Third, and Ninth.) Instead, he largely critiques the holdings, and asks courts to hold differently going forward.
So the good news is that Dean Klonoff has published an actual work of doctrinal scholarship that can help lawyers, something we desperately need more of. The bad news is, it’s clearly plaintiff-biased; but that’s not really bad news. Dean Klonoff is a smart man who knows class-action law well; reading his analysis of the latest class certification cases will help any conscientious defense lawyer hone his arguments. The real bad news (call it the "ugly") is that these are apparently the best pro-certifictaion arguments. Rather than basing them on the case law as it stands, Klonoff instead questions the legitimacy of recent holdings:
They suggest a suspicion about class actions generally, premised on the assumption that the class action is a blunt instrument to coerce settlement and secure large attorneys’ fee awards.
In fact, as several class-action plaintiffs made clear at the DePaul Law Review Symposium, these are not the only arguments available to plaintiffs. Plaintiffs who actually meet the requirements of Rule 23–by avoiding individualized issues, providing evidence that each of the requirements are met, and engaging in comprehensive legal analysis where appropriate in multistate class actions–are on exceptionally strong footing at certification. When one’s arguments all start out by assuming a premise like "courts should not be suspicious," then the battle is won or lost before any argument gets made. Either the judge is suspicious or she isn’t, either she agrees that the text of Rule 23 is secondary to deterrence and efficiency, or she does not. At that point, all the arguments of this kind that exist are unlikely to change her mind from where she started.