Despite my best intentions, I have not been posting here as often as I would like in the past few months. But that does not mean that I have not been reading. So, in lieu of a long-winded analysis of some new tactic, trend, or article, please accept the following capsule reviews of three of the more interesting and practical class action articles from the last few months:
(1) Alex Atticus Parkinson, Class Actions as Firms. Class action scholars have scratched their heads over how to characterize a Rule 23 class action suit for years. Is it just specialized form of joinder? (Probably.) A pure deterrence mechanism that would work better if we ignored compensation class members? (Probably not.) A trust? (Probably not.) New lawyer Parkinson adds a fresh perspective to the debate, arguing that we should really look at a class action as an example of a Coasian firm.
Like firms, class actions are collective enterprises that separate ownership and management, aggregate resources to avoid the higher costs of transacting on the market, cede control to a centralized manager to realize efficiency gains, and organize around a profit motive. Class actions also contain a structure that not only resembles a firm but also provides a useful architecture for balancing tiers of interests. Moreover, like a firm, there is a natural limit to the growth of a class action’s external boundaries—class actions expand to the point that litigating individually and outside the class would be less costly than litigating within the “firm.”
The theory isn’t perfect, but it’s interesting and provocative, as good scholarship should be. Of particular use to defendants, Parkinson’s argument provides a fresh justification for enforcing–rather than ignoring–Rule 23(a)(4)’s adequacy requirement.
(2) Howard Erichson, Aggregation as Disempowerment: Red Flags in Class Action Settlements. Professor Erichson has articulates a central concern about class-action law: when it comes to settlement, the interests of defendant (who wants the case gone), class counsel (who wants to get paid), and sometimes judges (who want a clear docket) align, and they tend to align against the actual members of the class (who would like fair compensation for giving up their claims). As he puts it:
Too often, class settlements include terms that leave one scratching one’s head and wondering why a settlement would include such a term. And too often, the answer is not that the provision added value for the class, but rather that it served the aligned interests of the defendant and class counsel.
Professor Ericsson’s article is particularly useful for its red flag list, which identifies a number of terms that indicate that a settlement is, if not outright collusive, at least serving the wrong interests. Among the terms that defendants should avoid, or at least be able to explain: coupons, reversions, cy pres provisions, spurious injunctive relief, overly broad releases, expanding class definitions, and terms that punish or discourage objectors. Professor Erichson’s red flag list is not the first, but it exhibits a deep knowledge of caselaw. Anyone walking into a settlement should bring this article with them.
(3) Robert Klonoff, Class Actions II: A Respite from the Decline. Back in 2012, Professor Klonoff sounded the alarm that federal appellate courts (most notably, the Supreme Court) were treating class certification too rigorously. Five years later, as the Supreme Court has issued further opinions and the appellate courts have pushed back on some defense arguments (most notably, the more aggressive interpretations of Comcast Corp. v. Behrend), he walks that warning back some.
As I explain below, one explanation for these developments is that courts have reacted negatively to overly aggressive advocacy by defendants. Another is that courts are simply taking a break from the strident approach that has already resulted in significant cutbacks in class actions. Furthermore, I believe that courts have backed away from the oft-cited view that the pressure to settle is itself a reason to curtail class actions. While that theme still appears as a consideration in whether to grant review under Rule 23(f), it has all but disappeared as a rationale for restricting class actions. Instead, courts have adopted a more measured—and, in my view, more justified—approach: looking at each case based on its particular facts and circumstances.
Professor Klonoff remains a scholar who is unabashed in his belief that courts do not certify classes frequently enough. But he’s got extraordinary insight, and his account of the past five years of class action jurisprudence offers a plausible and realistic interpretation of how courts look at the class action cases currently before them. This article is essential reading, both for new lawyers who need a good 30,000-foot view of the landscape, and more experienced practitioners who need to take a step back.