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Squeezing class actions

The following contribution to our class-action symposium is by Scott Dodson, Associate Professor of Law at William & Mary Law School.  Professor Dodson teaches Civil Procedure and Federal Courts and has written a book and more than twenty-five articles in those areas.  He has blogged on procedural issues at PrawfsBlawg, Civil Procedure & Federal Courts Blog, and SCOTUSblog.

In their prominent Civil Procedure casebook, Rick Marcus, Marty Redish, Ed Sherman, and Jim Pfander describe the 1966 amendments to Rule 23 of the Federal Rules of Civil Procedure as “bring[ing] about great changes in class action practice.”  Those amendments were designed with two related ideas in mind.  First, litigating in bulk could save costs for both plaintiffs and defendants, and it could be more efficient for courts.  Second, the cost savings to plaintiffs, coupled with expanding the scope of a grievance to many different class members, could encourage private litigation to enforce public ends.  The class action, in other words, was designed to be a public benefit, saving litigant and judicial resources while encouraging salutary litigation.

One wouldn’t guess that from reading recent Supreme Court decisions.  Today, the class action is decidedly persona non grata.  The Supreme Court’s 2010 Term in particular evinces both skepticism of and hostility to class actions.  Justice Antonin Scalia was the main frontman, writing two major opinions restricting class actions and issuing a stay by himself in another.

What intrigues me is that the assault on class actions is coming so forcefully from all sides.  In Wal-Mart Stores Inc. v. Dukes, the Court narrowed the availability of Rule 23(b)(2), with the effect of shuttling many discrimination and civil-rights classes into the more-difficult-to-sustain mechanism of Rule 23(b)(3).  Dukes also enhanced the requirement of commonality under Rule 23(a)(2), which applies to all class actions in federal court, by holding that a class must demonstrate that each class member’s claim must depend upon a common contention capable of class-wide resolution.  Dukes thus confronts the federal class-action mechanism directly.

Other cases, however, come at class actions from a different angle.  In Philip Morris USA Inc. v. Scott, Justice Scalia stayed a state-court class action against several tobacco companies on behalf of all Louisiana smokers alleging that the companies defrauded the plaintiffs by distorting public knowledge about the addictive effects of nicotine.  The Louisiana courts had credited the plaintiffs’ theory, certified the class under state law, and entered a judgment of almost $250 million against the defendants.  Justice Scalia nevertheless stayed the judgment until the defendants could seek certiorari in the Supreme Court because, in his view, the Louisiana courts had used the class-action device to eliminate the defendants’ opportunity to contest the element of reliance on an individualized basis.  Justice Scalia reasoned that such an effect implicated constitutional due-process concerns.  Scott, then, reflects one Justice’s invocation of the federal Due Process Clause to constrain state class-action relief.

In AT&T Mobility LLC v. Concepcion, the Court held that the Federal Arbitration Act prohibits states from conditioning the enforceability of certain arbitration agreements on the availability of class-wide arbitration procedures.  By lifting state regulation, the decision enables private parties to restrict class procedures under the aegis of the FAA.  In effect, Concepcion permits – even encourages – defendants, through private arbitration agreements, to eliminate the class mechanism altogether.

Class actions have been under attack for some time, but usually on their own terms, and with some apologies by the Supreme Court, as in the famous class-action cases of General Telephone Co. v. Falcon, Amchem Products, Inc. v. Windsor, and Ortiz v. Fibreboard Corp.  But this Term’s assault comes from all sides: directly narrowing Rule 23, imposing federal constraints on state class-action mechanisms, and encouraging the privatization of procedure.  And the pervading tenor of the Court’s opinions suggests that class actions ought to be disfavored and used only in rare cases.  These features of the Court’s agenda lead me to make three observations.

First, and most obviously, the Court’s decisions probably will reduce the numbers and scope of class actions in both state and federal court.  As analogous support, consider the effect of the Supreme Court’s Amchem and Ortiz decisions from 1997 and 1999, respectively.  These decisions narrowed the scope of Rule 23(b)(3) and overturned class settlements of asbestos-related claims.  One might reasonably expect the numbers of mass-tort class-action cases to fall in the wake of Amchem and Ortiz.  That seems to have happened; a recent study by Brian Fitzpatrick found that of the 688 federal class settlements in 2006 and 2007, almost none was a mass tort case.  If Amchem and Ortiz had such an impact on mass-tort classes, consider what kind of an impact last Term’s Wal-Mart decision will have on all federal class actions.

To compound the effect, state courts and class-arbitration agreements are no longer safe havens for plaintiffs who fear a new restrictiveness in federal courts.  The Class Action Fairness Act of 2005 reduces the number of potential classes that can dodge removal to federal court.  For those classes that properly remain in state court, Scott presages greater federal oversight of state procedures.  And for those classes that the law undeniably allows, Concepcion permits defendants broad leeway to contract around those laws through arbitration agreements.  Ultimately, the effect on class actions is an empirical question, but even in the absence of data, it is not a stretch to wonder if we are hearing the death knell of the class action.

Second, the Court’s recent class-action decisions coincide with a shift in procedure theory from liberality to restrictiveness.  Bob Bone once called for more procedure theory, and perhaps the Supreme Court is responding to that call.  If so, the class-action decisions, with their anti-class sentiments, support what Ben Spencer has observed as a new “restrictive ethos” of civil procedure that elevates efficiency over court access.

Third, the Supreme Court is charting this course on its own.  Although it routinely entertains proposals and conducts studies, the Rules Advisory Committee has not seriously tinkered with Rule 23, and its basic structure remains identical to its original 1966 form.  Congress rarely intervenes in federal procedure, and although it did pass the Class Action Fairness Act to expand the removability of state class actions, it did not purport to change the standards for class certification in state or federal court or otherwise constrict the availability of the class mechanism overall.  Others, such as Steve Burbank, Kevin Clermont, Arthur Miller, and Steve Yeazell, have criticized the Court for failing to defer to the rulemakers and to Congress in other areas of civil practice.  Whether their criticisms apply to the Court’s recent class-action decisions I leave to others to pursue; I mean here to point out that the Court’s class-action decisions may be part of a broader mistrust in the rulemaking and legislative processes to solve perceived problems with civil litigation.

Whatever one thinks of the Court’s agenda from a normative perspective, we ought to be aware of how its decisions affect the direction of procedure.  In a narrow sense, decisions like Wal-Mart and Concepcion can be seen as part of a recent trend cabining the use of class mechanisms.  But in a broader doctrinal context, they may signify a macro shift in procedural theory toward efficiency, with system-wide doctrinal implications.  And in a structural context, they may reveal a new role for the Supreme Court in civil-procedure development – as leader, rather than as follower.

Recommended Citation: Scott Dodson, Squeezing class actions, SCOTUSblog (Aug. 30, 2011, 3:35 PM),