NewYorkUniversity
LawReview
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Volume 71, Number 1

April 1996
Symposium Articles

Representing the Unrepresented in Class Actions Seeking Monetary Relief

Brian Wolfman, Alan B. Morrison

Class actions are important and useful both to deter wrongful conduct and to provide compensation for injured plaintiffs. In complex cases, however, the existing class action structure falters. In this Article, Messrs. Wolfman and Morrison argue that in “settlement class actions” the current class action rules do not adequately protect class members whose interests do not coincide with those of the class representatives and the class attorneys. Through a survey of recent, prominent settlement class actions, the authors show that the current system does not fairly treat subgroups in a class with respect to matters as diverse as future injury, fee distribution, applicable law, and timing of payments. In response to these problems and others, Messrs. Wolfman and Morrison ultimately urge the adoption of amendments to the class action rules to handle settlement class actions. The effect of these amendments would be twofold: first, to ensure that “unrepresented” class members would be represented by counsel who would have adequate opportunity to champion their interests; and second, to allow a judge handling a settlement class action to evaluate the substantive provisions of a proposed settlement, and to impose or reject certain terms in order to assure fairness within the class, as well as between the class and defendants.

An Empirical Analysis of Rule 23 to Address the Rulemaking Challenges

Thomas E. Willging, Laural L. Hooper, Robert J. Niemic

Professor Edward H. Cooper’s Rule 23: Challenges to the Rulemaking Process, echoing concerns of the Judicial Conference’s Advisory Committee on Civil Rules, encourages investigation of the assumptions that underpin the policies behind Federal Rule of Civil Procedure 23. In this Article, Willging, Hooper, and Niemic respond to Cooper’s call for action and examine these common assumptions supporting Rule 23, presenting their work through seventeen discrete issues raised by Professor Cooper as prevalent in class action litigation. Based on a study conducted by the Federal Judicial Center, this Article provides data and analyses concerning class action cases terminated between July 1, 1992, and June 30, 1994, in four federal district courts.

Better Late Than Never: Notice and Opt Out at the Settlement Stage of Class Actions

George Rutherglen

Whether the Due Process Clause requires individual notice to class action members has not yet been resolved by the Supreme Court. Under the literal terms of Rule 23, however, courts currently require early individual notice in (b)(3) class actions, while leaving notice to the discretion of the trial court in (b)(1) and (b)(2) actions. In this Article, Professor Rutherglen questions the difference in procedural protections afforded to (b)(3) class members, on the one hand, and (b)(1) and (b)(2) class members, on the other. Arguing that effective notice need not meet the rigorous standard of early individual notice in (b)(3) class actions, Professor Rutherglen suggests a new rule that would give class members the right to receive individual notice later in the proceeding, and, at least for (b)(3) class members, the right to opt out at the settlement stage. Such a rule would better protect class members because it would provide notice at a time when information about the merits of the claim is more readily available. It also would empower class members to register their dissatisfaction with the performance of the class attorney by opting out. Where previous scholarship emphasizes the procedural dimensions of notice and the right to opt out under the Due Process Clause, Professor Rutherglen emphasizes the substantive aspects of the right to opt out. He stresses the importance of making substantive changes in the law that would provide for better management of both large class actions and related individual claims.

Beyond the Class Action Rule: An Inventory of Statutory Possibilities to Improve the Federal Class Action

Thomas D. Rowe, Jr.

This Article surveys several areas in which legislation might enhance the utility of federal class actions. It does not suggest a statutory form of class action like statutory interpleader, but it takes initial inspiration from the interpleader statutes’ treatment of subjects beyond the joinder device itself—subject-matter jurisdiction, venue, personal jurisdiction, and antisuit injunctions. The matters on which legislation might be most useful are supplemental jurisdiction, to overrule the limiting holding of Zahn v. International Paper Co. with some possible parallel broadenings of supplemental jurisdiction for nonclass contexts; and authority to enjoin state-court proceedings that could substantially interfere with the conduct of a federal class action. The Article omits treatment of choice-of-law issues, which are the subject of another contribution to this Symposium. Beyond areas suggested by the interpleader statute, the Article discusses some issues of substance-specific procedural rules and the problems posed by global settlement funds. Aside from particular substantive fields such as securities-fraud litigation, federal legislation dealing with class actions does not seem likely for the present. While some statutory measures could be helpful, and others of a broader nature such as authorization or trial in addition to pretrial proceedings after transfer and consolidation could be useful in class as well as nonclass litigation, the main focus for any class action changes belongs on Rule 23 itself and not on legislation.

Individual Justice and Collectivizing Risk-Based Claims in Mass-Exposure Cases

David Rosenberg

In this Article, Professor Rosenberg discusses the perceived problem of Individual justice in collectivized adjudication of mass-exposure cases. He focuses on risk based claims—i.e., those claims predicated on exposure to a tortiously imposed risk, rather than on actual harm and loss—to argue for greater collectivization. Finding that standard procedural analyses are deficient, Professor Rosenberg calls for consideration of collectivization from the perspective of the deterrence and compensation policies underlying tort law generally and risk-based claims specifically. He demonstrates that deterrence offers the strongest—if not only—justfication for such claims, and that collectivization enhances the deterrence goal in mass-exposure litigation. In addition, Professor Rosenberg explains that collectivization also promotes individual justice by providing plaintiffs with the levels of compensation and insurance that they would rationally select on their own, and that collectivization is consistent with objective standards used to determine both liability and damages in tort law. Based on this analysis, Professor Rosenberg concludes that if allowed to choose the process for adjudicating and settling mass-exposure cases, individuals would select mandatory collectivization.

Individuals Within the Aggregate: Relationships, Representation, and Fees

Judith Resnik, Dennis E. Curtis, Deborah R. Hensler

Over the past decades, aggregate litigation has become more common; through various statutory, rule-based, and informal means, judges and lawyers consolidate large groups of individual litigants and claims. The paradigm of a class action, however, continues to dominate the literature, and with it, the assumption that a single set of lead lawyers represent all of the plaintiffs in the assembled group.

This article addresses the problems raised when, in contrast to that paradigm, aggregation brings together mass tort plaintiffs, some of whom come with individually-retained plaintiffs’ attorneys (IRPAs), who perform tasks in addition to those done by a court-appointed plaintiffs’ steering committee (PSC). Our central questions are about the roles of the many lawyers within the aggregate and the potential for policymakers to use procedural tools and the law of attorneys’ fees to structure incentives to enhance the experience of individual litigants within the aggregate. Animating our interest is the view that, in addition to effectuating outcomes, litigation is also a means by which to express political and social relationships. What occurs within an aggregate formed for adjudicatory purposes is of moment for the polity.

Underinclusive Class Actions

Nancy Morawetz

In recent years, there has been much case law and scholarly writing on the problems associated with broadly defined classes in the class action context. Here, however, Professor Morawetz discusses the complex issues resulting from class definitions that are drawn too narrowly, rather than too broadly. Throughout the article, Professor Morawetz focuses on the plight of those individuals who are excluded from class definitions and the institutional structures that may discourage broad class definitions under particular circumstances. Professor Morawetz concludes by offering proposals that will limit the number of classes that are drawn too narrowly by imposing greater responsibility on attorneys and the courts for reviewing class definitions for narrowness.

Overlapping Class Actions

Geoffrey P. Miller

Large-scale class actions pose unique problems that challenge the traditional norm of allowing parallel litigation to continue in the courts of different jurisdictions. Professor Miller argues that the existing system represents a series of compromises between the need for both the efficient and orderly disposition of disputes and a residual concern for the principle of separate sovereignty. The efficiency concern in the large-scale litigation setting moves to the forefront because of the massive difficulties faced by the courts in disposing of such litigation in an expeditious and accurate manner. The interest in respecting separate sovereignty, however, is of diminished importance because of the inherently interstate nature of this type of litigation. To accommodate this weighing of public policies, a number of innovations have been adopted, and still others proposed, which move toward an exclusive forum model—the model in which litigation arising out of a single complex of operative fact should proceed in one and only one forum. Professor Miller recommends additional reforms that would move the conduct of class action litigation in the direction of the exclusive forum model. Specifically, he recommends that (1) the removal power should be broadly construed to authorize federal courts to take over overlapping state class action cases when the federal court litigation offers the opportunity for the complete and adequate resolution of the claims asserted in state court; (2) federal courts with jurisdiction over a class action should interpret the Anti-Injunction Act to authorize antisuit injunctions against overlapping state class actions, in situations where the state-court proceeding threatens to obviate the federal-court litigation by means of a comprehensive settlement that extinguishes the federal law claims, at least when the federal court concludes that there is a substantial probability that the federal litigation will result in a fair and adequate settlement or judgment that affords relief to the members of the plaintiff class; and (3) federal courts should continue to experiment with the auction approach to class action litigation, and in furtherance of this end, should view the possibility of a litigation auction as an additional consideration favoring the centralization of overlapping class cases in a single federal forum.

Choice of Law in Complex Litigation

Larry Kramer

Nearly all proceduralists agree that all the claims in a complex case should be decided under a single substantive law or, at the very least, under a uniform choice-of-law rule. In this paper, Professor Kramer challenges the assumptions at the foundation of that consensus. In so doing, he confronts two myths of late-twentieth century procedure: that the sort of procedural maneuvers used to circumvent unambiguous Supreme Court precedents precluding federal courts from creating choice-of-law rules are legitimate; and that the unusual nature of complex litigation justifies such measures. Professor Kramer exposes the fallacies underlying the first premise then presents historical and normative arguments against the second. He questions both the principle that the parties in complex litigation are similarly situated with respect to the applicable law and the notion that adjudicating such litigation under more than one law is unmanageable.

Foreword

Samuel Estreicher

Federal Class Actions After 30 Years

Does the experience of thirty years suggest a need to reexamine the legal framework for class action litigation? Consider some of the developments during the intervening period that might have been beyond the prescience of the framers of the current version of Rule 23:

  • the use of the (b)(1) category to certify nationwide classes without notice or opt-out rights because of a concern that a defendant's assets would be insufficient to satisfy all projected claims;
  • the availability of individualized recoveries in civil rights litigation also seeking classwide injunctive relief under the (b)(2) category, again without notice or opt-out rights;
  • the enactment in 1968 of the Multidistrict Litigation Act, enabling federal courts to consolidate suits across the country into one proceediing for pretrial purposes, including motions for summary judgment and nationwide settlements;
  • the possible certification of (b)(3) class actions not only in single-event mass-disaster cases but also in "mass torts" like asbestos, silicone gel breast implants, and nicotine-dependency that often present a range of claims arising from exposure to toxic substances, including claims of present injury and claims of enhanced risk unaccompanied by present symptoms;
  • the emergence of settlement-only class actions, often involving in-kind relief rather than cash distributions to class members;
  • the growing perception on the part of federal judges that burgeoning dockets require a greater receptivity to techniques for aggregating claims and consolidating lawsuits even in the "mass tort" context; and
  • the development of alternatives to federal class actions such as separate suits utilizing the doctrine of offensive nonmutual issue preclusion, and state-court actions providing a nationwide forum for class claims.

The papers in this volume provide a valuable starting point for assessing whether these (and other) changes in the legal landscape make out a case for reform.

Rule 23: Challenges to the Rulemaking Process

Edward H. Cooper

Three decades have elapsed since Rule 23 of the Federal Rules of Civil Procedure last underwent revision. Taking a cue from proposed amendments prepared by the Civil Rules Advisory Committee, Professor Cooper asks whether now is the appropriate time to revise Rule 23. In this Article, he identifies three potential “big changes” to the Rule: substantially curtailing class actions; accommodating the needs of mass-tort actions; and recognizing the class as an entity, distinct from Its representatives. After outlining and critiquing the Advisory Committee’s draft, Professor Cooper raises a host of questions about many aspects of Rule 23 and suggests that perhaps we do not know enough about the operation of the current version of the Rule to undertake effective reform. Although he cautions against revision of Rule 23 before we obtain answers to some of the questions posed, Professor Cooper remains optimistic that the Rule can be improved in some ways without great cost.