For a long time, I have had a very specific law review article I’ve wanted to write, but with my many other commitments, it has never come to fruition. And, given my schedule coming up, it’s unlikely it ever will. But I do have this blog, so why not just outline the idea here?
Scholars have worked for a long time to establish a governance mechanism for class actions that would prove both effective and legitimate. It’s a difficult balance to strike: most policymakers want class actions that can operate effectively as litigation devices, but that don’t just hijack the choses in action of numerous unnamed class members. As a result, we’ve seen radical proposals to reform the class action, including making it into a trust device, and just eliminating class plaintiffs altogether.
In fact, there’s an even more radical solution, that would at the same time require no change to the existing Rule 23. Enforce Rule 23(a)(4)’s adequacy requirement. As written, and as originally interpreted, the adequacy requirement exists to ensure due process is met. It is the constitutional guarantee that a representative action like a class action is legitimate.
The problem, then, is that most modern class plaintiffs are not adequate to the task. That’s not to speak ill of class plaintiffs. They’re recruited, and then “trained” to defer to their lawyers’ judgment of what is best for the class. And that makes sense from the lawyers’ standpoint, too. There is nothing that can disrupt a carefully planned legal theory in a complex case more than a wilful client.
This is why Rule 23(a)(4) is honored mostly in the breach. The other reason, as I’ve alluded to elsewhere, is a line of cases that read too much into a old motion to dismiss ruling upheld by the Supreme Court. The end result of that misreading is similar to the end result of the misreading of Eisen for several decades: courts inclined to certify class actions simply quote, without further analysis, the proposition that a named plaintiff does not have to be Arthur Miller  in order to represent a class.
So what would this kind of adequacy enforcement look like? Several courts this year have actually offered an idea.
- There would have to be affirmative evidence of the plaintiff’s adequacy. Boilerplate assurances of “zealous advocacy” would not be enough.
- Named plaintiffs would have to have actual working knowledge of their case. They still wouldn’t need to be legal experts themselves, but courts would not allow them to simply say they defer to their lawyers.
- Class lawyers would not be allowed to replace named plaintiffs without consequence.
Of course, this proposal is likely to receive criticism as well. The largest criticism is probably that reinforcing the adequacy requirement may make class actions as a device less effective. And, to the extent “less effective” means “requires some up-front work to file and maintain,” that may very well be true. But that does not make the criticism valid. The Supreme Court has recently reminded us that Rule 23’s requirements are “stringent” and “in practice exclude most claims.” And (and you’ll see here that I am a defense lawyer) that’s OK. Class actions should be rare, and they should be more expensive than the average lawsuit. They are far more lucrative, after all. If tracking down an adequate plaintiff—that is, one who has suffered an actual harm and is willing to represent the class and stand up to her lawyers when necessary—is that difficult, it may be that the lawsuit doesn’t have much merit to begin with.
What’s interesting is that we’ve tried this experiment at least once, and with good results. The Private Securities Litigation Reform Act added some prohibitions that made it extremely difficult to pull anyone who had bought a single share of stock into a securities lawsuit. The result was that institutional investors became class plaintiffs. There were fewer (though not no) meritless securities lawsuits, and the quality of the securities class action bar improved as well.
Properly enforced, adequacy makes a great asset to class action practice on both sides: it screens out truly frivolous suits, and it gives meritorious suits an edge by giving them a plaintiff who will do more than sign interrogatories and testify for three hours.