Q&A with Burford Capital CEO Christopher Bogart

I think that what you’re hearing from Justice Kavanaugh is what I’ll call the traditional opposition to class actions. And the opposition basically goes, as he framed it, a class action is a big scary thing because if it goes against you as a defendant, it could cost you a lot of money, and therefore there’s always some pressure to settle instead of litigating things out.

The issue that the courts really have to confront here is the balance between class actions and mass torts or multi-district litigation (MDLs). Because what’s happened is defendants—and I used to be a defense lawyer—have pretty successfully limited the scope and use of class actions. The reality is, class actions today make up only about 3 percent of the federal court docket, and about two-thirds of the settlement dollars that get paid out in class actions are paid out in securities cases. So class actions are not really a huge economic vehicle any longer in U.S. federal litigation.

What’s happened instead, and I don’t think that this is a particularly positive thing from my perspective, is we’ve created a little bit of the Wild West with respect to MDLs. So now MDLs have gone from being about a quarter of the federal court docket 20 years ago to being a clear majority now—64 percent in 2023, which is I think the last year reported. So you’ve got more than 400,000 mass court actions pending. And the reason I think that’s a potential problem is that you lack a number of the controls and judicial supervision that you have in class actions when you go down the mass tort MDL road.

I think that’s exactly what happened. To your balloon analogy, those claims have to go somewhere. If you’re a claimant with an injury, you’re going to seek redress somehow or other. If the courts make it really difficult now to do that in the form of a class action, then enterprising lawyers are gonna figure out how to file those cases individually, and that’s why you have such high case numbers. If you just look at one big MDL, 3M had a big case about defective earplugs that caused a bunch of military injuries. There were literally hundreds of thousands of individual cases filed, and so each one of those cases is taking space on the docket, costs a filing fee, has administration around it. And at the same time, while there’s a judge supervising discovery in the MDLs, there’s not the same level of oversight, both of settlement process and of the screening and the payment of the cases. And so while you save the class action dynamic, you really do create a fair bit of judicial mischief when you get into numbers like that.

Yes, except that they can be much, much, much larger numbers than that, as the earplug case shows.

Well, I think you’re going to find it difficult when you’ve got a tangible injury. You have to have some way of having that injury adjudicated and compensated. And you can do it in a class action or you can do it in an individual case. But you can’t just wave a wand and have it go away.

Judges should not be so hostile to class actions. I think frankly, the defense bar was too successful probably for its own good in getting certification to be so difficult. And I think that’s deprived the courts of the ability to supervise some of these cases more closely and more strenuously than they are today in the mass tort context. And so that’s why the DIG opinion by Justice Kavanaugh struck me as possibly going slightly in the wrong direction from my perspective, if what in fact he was signaling was a continued hostility to the use of Rule 23 certification.