The Decline of Class Actions

This Article argues that in recent years courts have cut back sharply on plaintiffs’ ability to bring class action lawsuits, thereby undermining the compensation, deterrence, and efficiency functions of the class action device. Starting in the mid-1990s, courts began expressing concern about the pressure on defendants to settle after a decision certifying a class. The business community also raised concerns that many multi-state class actions were brought in pro-plaintiff, state-court venues. Federal Rule of Civil Procedure 23(f), adopted in 1998, enabled defendants to obtain interlocutory review of federal district court decisions certifying class actions, and the Class Action Fairness Act (CAFA), adopted in 2005, had the effect of shifting most major class actions to federal court. There is now a large body of federal appellate court case law, and as a result of that case law, several disturbing trends have emerged. First, many courts now require that plaintiffs prove substantial portions of their cases on the merits at class certification. Second, several of the class certification requirements (class definition, numerosity, commonality, adequacy of representation, Rule 23(b)(2), and Rule 23(b)(3)), are now considerably more difficult to establish. Third, a number of courts have rejected class settlements by rigidly applying the requirements for class certification, even though the settlement eliminates the need for a trial. Fourth, a number of courts have essentially nullified so-called “issues classes” under Rule 23(c)(4) by requiring courts to Dean and Professor of Law, Lewis & Clark Law School. The author serves as the academic member of the United States Judicial Conference Advisory Committee on Civil Rules and previously served as an Associate Reporter for the American Law Institute’s project, PRINCIPLES OF THE LAW OF AGGREGATE LITIGATION (West 2010). The author has also served as a class action expert witness on a number of occasions and is a co-author of the first casebook on class actions, originally published in 1998 and now in its third edition. As a private attorney, the author handled more than 100 class actions, primarily on the defense side. The views expressed herein represent solely those of the author. Some of the case descriptions in this Article originally appeared in ROBERT H. KLONOFF, CLASS ACTIONS AND OTHER MULTI-PARTY LITIGATION IN A NUTSHELL (West, 4th ed. 2012). The author wishes to thank Professors Edward Bilich, Ed Brunet, Brian Fitzpatrick, Sam Issacharoff, Mary Kay Kane, David Marcus, Rick Marcus, Arthur Miller, Alan Morrison, and Charles Silver for their insightful comments. Also offering insightful comments were attorneys Ken Feinberg and Joe Sellers. He also wishes to thank his research assistants: Ben Pepper and Jacob Abbott have been invaluable throughout the project, and Brent Bielski, Eric Brickenstein, Ian Macleod, Brittany Medlin, and Matthew Preusch have supplied useful research. Washington University Open Scholarship 730 WASHINGTON UNIVERSITY LAW REVIEW [VOL. 90:729 examine whether the case as a whole satisfies the predominance requirement of Rule 23(b)(3). Finally, the Supreme Court has upheld binding arbitration clauses that prohibit resolution of disputes on a classwide basis. Although some class actions remain viable, such as certain securities fraud, wage and hour, and antitrust class actions, the overall impact of these case law trends has been to curtail substantially the ability of plaintiffs to obtain class treatment. This Article thus concludes by urging courts, rule makers, and Congress to return to a more balanced approach to classwide adjudication.