"We're Scared to Death": Class Certification and Blackmail

October
2003
Charles Silver

This Article discusses the charge that class actions subject defendants to excessive settlement pressure, so that defendants effectively are blackmailed. Prominent federal judges, including Frank Easterbrook, Henry Friendly, and Richard Posner, have endorsed this proposition, which is drawn from a famous law review article by Professor Milton Handler.

The Article begins by describing the blackmail charge in detail. A close reading reveals four different accounts, some of which are incompatible with others. Proponents have missed these important differences. The Article then assesses the soundness of each version of the blackmail charge. None survives scrutiny. All (except possibly Handler's) use an analogy to blackmail that is faulty and unhelpful. All make factual assertions that are questionable or unproven, such as the claim that class actions always settle or that risk aversion drives the decision to settle on the defense side. All also need, but lack, a persuasive normative account of settlement pressure, without which it is impossible to show that class action defendants wrongly are coerced.

This article appears in the October 2003 Issue: Volume 78, Number 4