The Modern Law of Class Actions and Due Process

By Professors Allan Ides and Simona Grossi

This article is available on SSRN.


Abstract:


Our goal in writing this article was to offer helpful insight for a reformed interpretation and application of Rule 23 that would make the Rule serve its intended democratic function. The idea of due process is a promise of the rule of law tempered by reasonableness, fairness, and efficiency. It embraces both the value of individual autonomy and the collective interests of the community. The idea of class actions, premised on due process, is to provide a pragmatic method of dispute resolution that is fair to the individual and responsive to the needs of the community and the challenges generated by widely spread and shared harms. In this respect, class actions operate as a tool of democracy. Rule 23 should be interpreted from this hopeful and effective perspective, one that balances individual autonomy against the legitimate needs of the community. But the Rule is not accomplishing its mission. As we show in the article, it appears to be infused with its framers’ self-doubts, and the Supreme Court treats it as an unwelcome guest in the home of traditional litigation forms—see, for example, our discussions of Ortiz v. Fibreboard Corporation (1999); Wal-Mart Stores, Inc. v. Dukes (2011); Jennings v. Rodriguez (2018); Nutraceuticals Corp. v. Lambert (2019).

Government Class Actions After Jennings v. Rodriguez

by Maureen Carroll, Alexandra D. Lahav, David Marcus & Adam Zimmerman

This post is excerpted from the Harvard Law Review Blog.

The Supreme Court’s recent decision in Jennings v. Rodriguez raised the momentous question of whether the government can indefinitely detain people without a hearing. If the government has its way, the case also may close the courthouse doors to a wide array of class actions long used to challenge unlawful government action.

In Jennings, the Court, in an opinion by Justice Alito, ruled that the government did not have to offer detained immigrants bond hearings under the Immigration and Nationality Act. But the Court declined to address a related issue—whether denying bond hearings would violate due process. Instead, the Court sent the case back to the Ninth Circuit to address that question first.

But the Court didn’t stop there. At the end of the majority opinion, the Court also invited the Ninth Circuit to consider whether plaintiffs could bring a class action at all for their due process claim. In so doing, the Court asked whether individual differences between plaintiffs prevented courts from certifying class actions in due process cases, just as they did in Wal-Mart Stores, Inc. v. Dukes, a multi-billion dollar damage class action decided by the Supreme Court seven years ago.

Read the complete post here.

Federal Circuit Adopts Professors' Theories on Veterans' Courts Hearing Class Actions

Update: Following the Federal Circuit's path-breaking decision permitting veterans to bring class actions in April, an en banc panel of the Veteran's Court has just set down a schedule for briefing and oral argument to consider certifying a class action in that case. 

Relying, in part, on an amicus brief filed by Professor Adam Zimmerman and others, the Federal Circuit this week agreed that veterans can bring class actions in veterans court in the case Monk v. Shulkin.

"By adopting our theory that this veteran's court could hear class actions under its statute, the Federal Circuit not only creates a meaningful path for veterans to pursue desperately needed institutional reform, but it has essentially paved the way for almost all other agencies with similarly worded authority to do the same," said Zimmerman.

The Wall Street Journal reported: "Adam Zimmerman, a class-action expert at Loyola Law School who filed an amicus brief in the case along with other academics, said the Federal Circuit ruling has the power to help more than the veterans. It also could pave the way for other agencies granted similar authority to the veterans court to hear collective actions, he said.

Relevant excerpt of opinion:

Under 38 U.S.C. § 7264(a), “[t]he proceedings of the [Veterans Court] shall be conducted in accordance with such rules of practice and procedure as the Court prescribes.” This express grant authorizes the Veterans Court to create the procedures it needs to exercise its jurisdiction.

Other tribunals have relied on statutes with similar language as 38 U.S.C. § 7264 to aggregate claims and create class action procedures, including the Equal Employment Opportunity Commission (“EEOC”). See Amicus Br. of 15 Admin. Law, Civil Procedure, and Fed. Courts Professors at 10–11 (noting that the EEOC was granted authority to “issue such rules, regulations, orders and instructions as it deems necessary and appropriate to carry out its responsibilities” pursuant to 42 U.S.C. § 2000e-16(b)). Under this authority, the EEOC adopted a class action resolution procedure. 29 C.F.R. § 1614.204; see, e.g., 57 Fed. Reg. 12,634 (Apr. 10, 1992); Wade v. Donahoe, No. CIV.A. 11-3795, 2012 WL 3844380, at *13 (E.D. Pa. Sept. 4, 2012) (“Pursuant to [its 42 U.S.C. § 2000e-16(b)] authority, the EEOC has promulgated regulations for class actions.”).

On the basis of the express statutory authority of the Veterans Court to prescribe “rules of practice and procedure,” the Veterans Court may prescribe procedures for class actions or other methods of aggregation.

Prof. Zimmerman Urges Veterans Court to Use Class Actions Before Adopting Formal Rule

By Professor Adam Zimmerman
Gerald Rosen Fellow

I was among those who filed an amicus brief--on behalf of the nation's leading scholars in administrative law, federal courts and civil procedure--in Veteran's Court today arguing how it may conduct class actions.

By way of background, in April, the Federal Circuit issued a pathbreaking decision holding that veterans could bring class actions in veterans courts, reversing over 30 years of precedent. Before that, veterans groups lacked meaningful ways to challenge systemic problems at the VA. Relying, in part, on our earlier amicus brief and our research in Inside the Agency Class Action, 126 Yale L.J. 1634 (2017), the Federal Circuit concluded that the nation's veterans courts indeed had power to hear class actions to improve efficiency, consistency and fairness in their own proceedings.

As a result, the veterans court has now begun to consider adopting formal rules to aggregate cases, including class actions. At the same time, veterans groups have already started filing class actions. So, the Veterans Court invited amici, including us, to weigh in on whether it can hear class actions before it adopts a formal rule to do so. Because formal rules often take several years to complete, how the veterans court proceeds now could have a dramatic impact on the speed in which it is able to provide justice for thousands of the nation's veterans.

Our brief, written with the Yale Law School Veterans Legal Services Clinic, surveys a range of different courts--federal courts, legislative courts and administrative tribunals--to show how they have experimented with class actions. In so doing, we show how many different courts gained invaluable experience, and swiftly resolved large numbers of pending cases, by adopting aggregate procedures, on a case by case basis, before adopting a formal rule to do so.

Some Thoughts on Microsoft v. Baker

By Professor Adam Zimmerman

The big story in Microsoft v. Baker -- the Supreme Court's latest decision involving class actions -- is the question it did not reach today: Do lead plaintiffs have standing to continue pursuing a class action after their individual claims go away?

By way of background, there were two issues in Microsoft v. Baker. The one most people are familiar with is a highly technical question. Whether the plaintiff's strategy in the case--which was to voluntarily dismiss the case with prejudice in order to appeal the denial of class certification--is an impermissible end-run around Rule 23(f)? Rule 23(f) was created nearly two decades ago to permit appellate courts to review whether or not a district court properly certified a class action. Because the decision to certify a class action -- or not -- was so momentous, before Rule 23(f), a grant often would result in a quick settlement, while a denial would often spell the "death knell" of the case. The class action rules were amended in 1998 to give the appellate courts power to hear class action cases in their discretion, even though the appellate courts usually won't hear a case until after the lower court issues a final judgment. Microsoft involved what the Court felt was an improper workaround that process. Rather than rely on 23(f), plaintiffs could voluntary dismiss their claims, receive a final judgment and then appeal the denial of class certification.

With Kindred, Supreme Court Signals It Will Stand By Arbitration Contracts that Limit Private Parties' Recourse in State Courts

By Professor Adam Zimmerman

This week, the Supreme Court rejected a Kentucky rule that prevented people from entering into arbitration with general power of attorney agreements. The Kentucky Supreme Court last year found that such agreements violated its constitutional guarantee to court access and held people only could only assign and waive those rights when a power of attorney contract expressly said so. The US Supreme Court found that the state rule unlawfully "single[d] out" arbitration agreements for "disfavored treatment" and violated the Federal Arbitration Act, which prevents states from discriminating against arbitration agreements.

In some ways, the impact of this decision is narrow. The Court emphasized that states could still prevent people from entering into contracts to arbitrate under "generally applicable contract defenses," like fraud. They just cannot adopt rules that only apply to arbitration. The Court took pains to emphasize that this Kentucky rule was unique because it specifically singled out arbitration as something that had to be expressly provided for, but not other forms of alternative dispute resolution, like settlement discussions or mediation. Said the Court in a footnote, "[m]ark that as yet another indication that the court’s demand for specificity in powers of attorney arises from the suspect status of arbitration rather than the sacred status of jury trials."

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. 

Should the Education Department Hear Class Actions when Colleges Collapse?

By: Professor Adam Zimmerman

This op-ed originally appeared on RegBlog.

Last month, ITT Educational Services—one of the nation’s largest for-profit colleges—announced that it was shutting its doors in the wake of several state and federal fraud investigations. The closure comes as the U.S. Department of Education cracks down on shady colleges that lure unwitting students with false promises of money and jobs. But behind the controversy over “predator schools” lies a more vexing problem: how the government will handle thousands of claims by ITT’s former students seeking federal loan forgiveness.

Federal law has long entitled students to federal loan forgiveness when they are left in the lurch by colleges that commit fraud or go bankrupt. The principle behind this rule is that students are doubly punished when they rack up crippling debt in schools that can never provide them with a marketable degree. But after the closure of Corinthian Colleges, a for-profit educational institution that collapsed two years ago under similar circumstances to those involving ITT, the backlog of claims brought by students seeking debt relief from the Education Department swelled to over 25,000. If another 30,000 ITT students go down the same road, it could be years before the Department decides whether these students are entitled to relief under federal law. As important, no existing process ensures that students with similar claims will be treated in the same way and that independent experts will make these determinations.

Prof. Zimmerman Publishes Inside the Agency Class Action in Yale Law Journal

Loyola Law School, Los Angeles Professor Adam Zimmerman’s newest law review article, Inside the Agency Class Action, sheds light on an often-overlooked bottleneck in ordinary citizens’ access to justice: the thousands of cases stuck in administrative courts. Cases brought in this system of shadow litigation often languish for years without remedy – delaying justice for plaintiffs ranging from veterans seeking compensation for medical care and children harmed by vaccines to students duped by fraudulent private universities and others in dire financial straits. Zimmerman and co-author Michael Sant’Ambrogio’s solution of using techniques developed for mass litigation has been met with enthusiasm by the federal government, which adopted recommendations permitting class actions in administrative hearings.

• Read “Inside the Agency Class Action,” to be published by the Yale Law Journal
• Read the adopted recommendations. 

ABSTRACT:
Federal agencies in the United States hear almost twice as many cases each year as all the federal courts. But agencies routinely avoid using tools that courts rely on to efficiently resolve large groups of claims: class actions and other complex litigation procedures. As a result, across the administrative state, the number of claims languishing on agency dockets has produced crippling backlogs, arbitrary outcomes and new barriers to justice.

A handful of federal administrative programs, however, have quietly bucked this trend. The Equal Employment Opportunity Commission has created an administrative class action procedure, modeled after Rule 23 of the Federal Rules of Civil Procedure, to resolve “pattern and practice” claims of discrimination by federal employees before administrative judges. Similarly, the National Vaccine Injury Compensation Program has used “Omnibus Proceedings” resembling federal multidistrict litigation to pool common claims regarding vaccine injuries. And facing a backlog of hundreds of thousands of claims, the Office of Medicare Hearings and Appeals recently instituted a new “Statistical Sampling Initiative,” which will resolve hundreds of common medical claims at a time by statistically extrapolating the results of a few hearing outcomes.

This Article is the first to map agencies’ nascent efforts to use class actions and other complex procedures in their own hearings. Relying on unusual access to many agencies — including agency polticymakers, staff and adjudicators — we take a unique look “inside” administrative tribunals that use mass adjudication in areas as diverse as employment discrimination, mass torts, and health care. In so doing, we unearth broader lessons about what aggregation procedures mean for policymaking, enforcement and adjudication. Even as some fear that collective procedures may stretch the limits of adjudication, our study supports a very different conclusion: group procedures can form an integral part of public regulation and the adjudicatory process itself.

Agency Class Actions In Action

The Administrative Conference of the United States voted to approve recommendations written by Professor Adam Zimmerman for almost all federal agencies. The recommendations, co-authored by Michigan State's Michael Sant'Ambrogio, recommend that federal agencies use class actions and other complex procedures in their own hearings.

Zimmerman says:

"Because agencies hear far more cases than federal and state courts, this is a big deal--for injured veterans, coal miners, consumers and others long denied the use of these kinds of procedures to commence and resolve their cases. Our recommendations will be published in the federal register and apply to all federal agencies that adjudicate claims."

• Read the full report here.
• Read the recommendations here.

What's New and Old About Asbestos Litigation?

By Professor Georgene Vairo

On October 1-2, the ABA TIPS Asbestos Litigation Task Force held its second round of hearings at Loyola Law School, Los Angeles. The Task Force was created to study the current state of asbestos litigation and consider ways in which fairness for both claimants and defendants can be achieved. The L.A. hearing, as well as an earlier hearing in Washington, D.C., revealed deep divisions among plaintiffs' attorneys and defendant attorneys on what needs to be done to deal with current aspects of what the U.S. Supreme Court once described as an "elephantine mass." Ortiz v. Fibreboard Corp., 527 U.S. 815, 821 (1999).

A 1991 Report of The Judicial Conference Ad Hoc Committee on Asbestos Litigation 2-3 (Mar. 1991) sets forth the challenge: "[This] is a tale of danger known in the 1930s, exposure inflicted upon millions of Americans in the 1940s and 1950s, injuries that began to take their toll in the 1960s, and a flood of lawsuits beginning in the 1970s. On the basis of past and current filing data, and because of a latency period that may last as long as 40 years for some asbestos related diseases, a continuing stream of claims can be expected. The final toll of asbestos related injuries is unknown. Predictions have been made of 200,000 asbestos disease deaths before the year 2000 and as many as 265,000 by the year 2015."

We are only two years away from that date, and the asbestos litigation has morphed significantly and shows no sign of abating any time soon. Back in 1991, the Judicial Conference report identified numerous problems: growing dockets in state and federal courts; delays in getting to trial; long trials with complex issues being litigated over and over; transaction costs that dwarfed any recovery. Additionally, "the exhaustion of assets threatens and distorts the process; and future claimants may lose altogether." One piece of "good news" is that the federal MDL that was established in the same year is near completion of the resolution of most of the cases filed in the federal courts.

Expert Analysis of Standard Fire Insurance Co. v. Knowles

Professor Georgene Vairo, an expert on class-action litigation who teaches and writes in the areas of mass torts, weighs in on Standard Fire Insurance Co. v. Knowles, argued before the Supreme Court on Jan. 7:

Key Issue: Can a plaintiff stipulate to damages below CAFA's federal jurisdictional threshold of $5 million where the aggregate claims of all class members exceed that amount?

Key Takeaway: The case comes down to a choice between allowing plaintiffs to openly manipulate CAFA's jurisdictional requirements, as well as scaling back the "master of the complaint" rule.

Prediction: I hope Justice Kagan writes the majority opinion. She reminded the defendant that there are two better options than requiring removal at this time. If the case is worth far more than $5 million, then the plaintiff is not an adequate representative of the class. If the plaintiff tries to play around once back in state court and get more than $5 million, then the defendant can remove again.

Wal-Mart and the Future of Employment Discrimination Class Action Law

By Associate Dean Michael Waterstone

This is another installment in the Summary Judgments summer series, "The Headline Club," in which Loyola Law School professors will discuss legal issues ripped from the front page.

On Monday, the Supreme Court decided Wal-Mart v. Dukes, reversing the Ninth Circuit's certification of a historically large class of women claiming sex discrimination against Wal-Mart. Employment discrimination lawyers have been eagerly awaiting the result in this case, realizing that either way, it would be determinative of the future of employment discrimination class actions (and maybe even class actions in other areas of law).

Other commentators whose views I respect have been quicker than me, and already weighed in on various parts of the Wal-Mart opinion - noting the Court's adverse reaction to the potential size and complexity of the class, the commonality analysis, and the Court's treatment of the social science evidence. Following up on an earlier post about this case, I write here to add my own voice to this chorus.

One issue in Dukes was whether this action - brought for injunctive relief, but also including claims for backpay - could be certified as a class action under 23(b)(2). This turned out to not be much of a fault line, as the Court unanimously held that claims for monetary relief may not be certified under Rule23(b)(2), holding that the claims for backpay were not incidental to the requested injunctive or declaratory relief. Fair enough: plaintiffs had tried to finesse this by not including claims for compensatory damages, which there was clear consensus was not enough. Future plaintiffs attempting reform litigation could choose to completely forego damage claims and focus on injunctive relief. Assuming some lawyer somewhere would take that case, but for the second part of the opinion - discussed below - this possibility would technically be open.

The Preclusive Effect of a Federal Court Denial of Class Certification

By Professor Georgene Vairo

My colleagues, Michael Waterstone and David Horton have already weighed in on two of the big three class action cases before the Supreme Court this term. I will talk about the third.

Provocatively but aptly titled "Will arbitration kill the consumer class action?", David's article noted that in AT&T v. Concepcion, the Supreme Court will decide whether the Federal Arbitration Act (FAA) preempts state courts from striking down class arbitration waivers under the unconscionability doctrine. As he put it, "contract procedure" enthusiasts are on the edge of their seats anxiously awaiting the Court's ruling. The Court will have to balance its general trend in favor of favoring arbitration against it's the ideals of federalism which should enable state's to provide their citizens with greater protections than those afforded by federal law.

Michael talked about Wal-Mart v. Dukes, which is likely to have huge implications for both employment discrimination and class action law. Plaintiffs are a class of female Wal-Mart employees alleging sex discrimination. The Ninth Circuit whittled down a class of about 1.5 million employees to 500,000. Yet, the class still may be the largest-ever gender bias class action case. The Supreme Court's order granting certiorari looks at two important questions: 1) whether claims for monetary relief can be certified under Federal Rule of Civil Procedure 23(b)(2)--which by its terms is limited to injunctive or corresponding declaratory relief--and, if so, under, what circumstances?

The answer to this question will resolve a circuit split on the issue of to what extent monetary damage claims are allowable in a 23(b)(2) class action; and 2) whether, when determining whether a Rule 23(b)(2) class may be certified when the plaintiffs' evidence--including statistical proof of disparities between men and women, anecdotal evidence, and expert proof on social framework analysis showing susceptibility to gender bias in the management structure--arguably establishes a common issue, as required under Rule 23(a), of a corporate-wide policy of discrimination? Attorneys who practice discrimination law of any type as well as all class action lawyers await the Court's answers to these questions because they will go a long way in determining the contours, in terms of size and remedies, that will be available to plaintiff classes in the future.

Will arbitration kill the consumer class action?

By Associate Professor David Horton

For "contract procedure" enthusiasts, few stories in 2011 will rival the U.S. Supreme Court's decision in AT&T v. Concepcion. The Court will decide whether the Federal Arbitration Act (FAA) preempts state courts from striking down class arbitration waivers under the unconscionability doctrine. It's no exaggeration to say that the fate of the consumer class action hangs in the balance.

The seeds of Concepcion go back to the late 1990s and early 2000s, when companies began to see mandatory arbitration clauses as a panacea for class action liability. During that period, most courts held that the FAA flatly precluded plaintiffs from aggregating claims. As a result, mandatory arbitration clauses not only funneled consumers outside of the court system, but forced them to pursue their lawsuits on an individual basis. But in 2003, a highly fractured plurality of the Court suggested in Green Tree v. Bazzle that the FAA didn't bar class arbitration. Thus, to continue to use arbitration as a bulwark against the class action, companies were forced to insert express class action waivers into their agreements.

In Discover Bank v. Superior Court, a landmark 2005 decision, the California Supreme Court held that these class arbitration waivers could be unconscionable when applied to numerous low-value claims. The state high court explained that, in those circumstances, class arbitration waivers amounted to "get out of jail free cards" for corporate liability. For instance, if a business defrauds a million consumers out of $10, no individual consumer will spend the time and money necessary to sue. That lawsuit will either be brought as a class action or not at all.