The New Class Action Regluators

Professor Adam Zimmerman presented at the University of Kansas' 50th Anniversary Perspectives on the Modern Class Action. An excerpt from his presentation, "The Intersection of Agencies and Class Actions," appears below.

Federal agencies have quickly become some of the most important regulators of class actions and court access—particularly as stalemates, splits and institutional constraints limit the Supreme Court and federal rules committees from reforming class actions. But we have yet to appreciate how powerful agencies really are in regulating court access or what, if anything, courts should do about it.

 
Agencies have many different tools to regulate class actions, and in turn, private enforcement of law. Relying on varying degrees of authority—statutes, funding, licensing and litigation positions—agencies can enable, disable or de-stablize litigation.

First, agencies may enable litigation in several ways. They may bar companies from mandating arbitration with others; create evidentiary presumptions or require disclosures that minimize the number of individual issues required to group together cases in federal courts; and they may even hear class actions and other kinds of aggregate litigation, themselves, reducing backlogs and improving opportunities for judicial review. 

Second, agencies can disable litigation. Agencies may preempt claims that raise the kinds of systematic practices that lend themselves to class treatment. And they can do this without much process, sometimes reversing themselves—through new interpretative regulations, “policy guidance” or manuals, or even, by simply filing an amicus brief when a new administration takes office. What agencies give, they can just as easily take away. 

Finally, agencies can destabilize class actions. Agencies can commence high-profile actions against the same defendant, seek the same funds or remedies, and on behalf of the same victims as private class actions. In such cases, agencies reserve tremendous power to encourage or discourage private litigation. In some cases, private counsel may file on the “coattails” of public enforcement efforts. In others, those same public enforcers may establish rival funds, challenge class counsel fee awards or refuse to establish remedies that raise additional obstacles to class certification.

But, as agencies assume an important new role as "class action regulators," they raise new questions for our federal courts. How should courts oversee agencies, that in turn, regulate an important form of access to courts? On the one hand, courts have long permitted Congress to give agencies significant power, as politically accountable actors, to interpret and enforce law. On the other hand, it's well-established that courts "say what the law is.” How can courts respect politically accountable branches, while protecting a vital form of court access?

I argue that courts can do so by requiring agencies take a “hard look” at decisions that impact collective redress. That is, agencies should meaningfully involve stakeholders and provide reasoned justifications for decisions that impact access to the court system.