Avoiding Death by a Thousand Cuts: The Relitigation of Class Certification and the Realities of the Modern Class Action

• Author: Martin H. Redish & Megan B. Kiernan
• Position: Louis and Harriet Ancel Professor of Law and Public Policy, Northwestern University School of Law/J.D. Candidate, Northwestern University School of Law, 2014; A.B., University of Pennsylvania, 2008
• Pages: 1659-1690

Avoiding Death by a Thousand Cuts: The Relitigation of Class Certification and the Realities of the Modern Class Action Martin H. Redish  & Megan B. Kiernan  INTRODUCTION .................................................................................... 1660 I. S MITH V . B AYER : A TALE OF TWO CLASS ACTIONS ............................... 1664 II. RES JUDICATA AND THE PROBLEM OF SERIAL CERTIFICATION ............. 1666 III. THE RELITIGATION OF CLASS CERTIFICATION ..................................... 1668 IV. SOLVING THE SERIAL CERTIFICATION PROBLEM BY RECOGNIZING THE REALITIES OF THE MODERN CLASS ACTION.................................. 1669 A. T RADITIONAL R ES J UDICATA AND S ERIAL C ERTIFICATION : A S QUARE P EG IN A R OUND H OLE ................................................... 1669 B. T HE R EALITIES OF THE M ODERN C LASS A CTION .............................. 1671 C. I MPLICATIONS OF THE R EALITIES OF THE M ODERN C LASS A CTION : C APITALISTIC S OCIALISM AND THE “G UARDIANSHIP ” M ODEL ........... 1674 D. I MPLICATIONS OF THE G UARDIANSHIP C LASS A CTION M ODEL FOR R ES J UDICATA IN THE C ONTEXT OF S ERIAL C ERTIFICATION A TTEMPTS ..................................................................................... 1675 V. GOING TOO FAR AND NOT GOING FAR ENOUGH: THE PROBLEMS WITH PROPOSED SOLUTIONS TO THE RELITIGATION OF CLASS CERTIFICATION .................................................................................... 1678 A. G OING T OO F AR : T HE B RIDGESTONE II S OLUTION ........................... 1678 B. N OT G OING F AR E NOUGH : T HE BAYER C OURT ’ S S OLUTION ............. 1681 VI. IMPLEMENTING THE SOLUTION ........................................................... 1687 CONCLUSION ....................................................................................... 1690  Louis and Harriet Ancel Professor of Law and Public Policy, Northwestern University School of Law.  J.D. Candidate, Northwestern University School of Law, 2014; A.B., University of Pennsylvania, 2008. 1660 IOWA LAW REVIEW [Vol. 99:1659 INTRODUCTION The modern class action may be appropriately analogized to the invention of fire. 1 If used properly, it can significantly advance societal goals. If misused, however, it quickly degenerates into something that causes significant harm. In order to promote the positive aspects of the class action while simultaneously controlling its negative tendencies, it is first necessary to understand the class action’s true nature and the important ways in which it departs from more traditional forms of litigation. Unfortunately, neither scholars nor jurists have successfully undertaken this Herculean task. As a result, class action litigation gives rise to considerably more systemic harm than good. In this Article, we will first discern the unique essence of the class action and then apply our insights to one of the thornier procedural pathologies brought about by the judicial system’s failure to recognize the class action’s unique status. The difficulty on which we focus our analysis is the serious problem of serial relitigation of class certification. In Smith v. Bayer Corp. , the Supreme Court was unsuccessful in its efforts to fashion a solution to this problem because it failed to recognize the unique procedural aspects of the class action. 2 Those aspects demand treatment that fundamentally differs from the manner in which the courts treat more traditional forms of litigation. In Bayer , the Supreme Court decided that a “federal [district] court [had] exceeded its authority under the ‘relitigation exception’ to the Anti-Injunction Act” when it enjoined an ongoing state judicial proceeding in order to “protect or effectuate” its earlier refusal to certify a class action. 3 The Court held that the relitigation exception permitted only injunctions that implemented “well-recognized concepts” of res judicata, and the district court’s injunction did not fall within this narrow category. 4 The Court’s decision in Bayer appears not to have been met with much criticism. Indeed, on the narrowest level, at least, there was not much to criticize. The Court merely clarified its interpretation of the relitigation exception to the Anti-Injunction Act. On its facts, the decision is correct. 5 Despite the seemingly straightforward nature of its opinion, however, the Bayer Court clearly missed an important opportunity to devise a real solution to a very serious problem: the inefficiency, coercion, and general unfairness 1. See MARTIN H. REDISH, WHOLESALE JUSTICE: CONSTITUTIONAL DEMOCRACY AND THE PROBLEM OF THE CLASS ACTION LAWSUIT 1 (2009). 2. Smith v. Bayer Corp., 131 S. Ct. 2368 (2011). 3. Id. at 2373 (internal quotation marks omitted). “A court of the United States may not grant an injunction to stay proceedings in a State court except as expressly authorized by Act of Congress, or where necessary in aid of its jurisdiction, or to protect or effectuate its judgments.” 28 U.S.C. § 2283 (2012). 4. Bayer , 131 S. Ct. at 2375–76 (quoting Chick Kam Choo v. Exxon Corp., 486 U.S. 140, 147 (1988)) (internal quotation marks omitted). 5. See discussion infra Part I. 2014] AVOIDING DEATH BY A THOUSAND CUTS 1661 that invariably flow from serial attempts to relitigate the issue of the certifiability of a class action against the same defendant. Normally, a defendant may invoke the family of doctrines encompassed within the concept of res judicata 6 to prevent such harassment. Indeed, such avoidance is usually cited as the very purpose for development of res judicata in the first place. 7 In the procedurally unique context of class action certification, however, res judicata is of little or no help in preventing the very injustice and inefficiency it was designed to avoid. The problem arises because of an intersection of fact and law. While normally res judicata bars subsequent suits on the same claim by the same plaintiff or those in privity with her, any individual who is a member of the potential class may seek certification. While respected jurists have argued that an initial denial of certification should bind all potential class members regardless of which of them sought certification in the initial suit, 8 the Bayer Court rightly rejected such an approach. It is well established that procedural due process guarantees each litigant her day in court; 9 therefore, individuals may not be constitutionally bound by the resolution of a suit in which they were not parties or privies of those who were parties. 10 Although the Bayer Court’s conclusion was correct as a matter of constitutional law, it leaves the defendant opposing the class in an extremely difficult position. A denial of certification in the initial suit can invite an almost endless parade of potential class members seeking certification, freed from the burdens of the res judicata doctrine. Even if the defendant is successful suit after suit, a combination of the never-ending drain on its resources and the everlasting possibility that at some point one of those courts will certify the class effectively forces that defendant to settle, whether or not the merits dictate such a move. This is far from a systemically satisfactory result and the relatively meager alternative solutions which the Bayer Court offered defendants are less than comforting. 11 In this Article, we propose a solution to the dilemma that all but paralyzed the Court in Bayer . In doing so, we fashion a dramatically revised perception of class action litigation. While as a technical matter the class action is nothing more than an aggregation device—much like interpleader, 6. Res judicata has been said to refer “to the prohibition on relitigating a claim that has already been litigated and gone to judgment.” RICHARD L. MARCUS, MARTIN H. REDISH, EDWARD F. SHERMAN & JAMES E. PFANDER, CIVIL PROCEDURE: A MODERN APPROACH 1094 (5th ed. 2009). The term also “is sometimes loosely used to refer to the totality of preclusion doctrines.” Id. 7. See, e.g. , Federated Dep’t Stores, Inc. v. Moitie, 452 U.S. 394, 401–02 (1981). 8. See In re Bridgestone/Firestone, Inc., Tires Prods. Liab. Litig. ( Bridgestone II ), 333 F.3d 763 (7th Cir. 2003), abrogated by Bayer , 131 S. Ct. 2368; discussion infra Part III. 9. See Martin H. Redish & William J. Katt, Taylor v. Sturgell , Procedural Due Process, and the Day-in-Court Ideal: Resolving the Virtual Representation Dilemma , 84 NOTRE DAME L. REV. 1877 (2009). 10. See Taylor v. Sturgell, 553 U.S. 880, 904–07 (2008). 11. See discussion infra Part V.B. 1662 IOWA LAW REVIEW [Vol. 99:1659 impleader, or intervention—the indisputable realities of the class action make quite clear that the relationship between attorney and client is qualitatively different in the class context than in traditional litigation. For all practical purposes, class attorneys function as far more than class members’ legal representatives: they act as quasi-guardians or trustees on behalf of the absent class members. This may or may not be a positive development. 12 But for good or ill, only the disingenuous or the naïve could seriously question the exceptionally powerful role attorneys play in class actions. Recognition of the significant difference between traditional litigation and the modern class action should logically lead to the conclusion that, at least for purposes of res judicata of the denial of class certification, the named plaintiffs are not the only real parties in interest. The class attorneys should be deemed real parties in interest on the certification issue, and therefore the direct estoppel impact of a certification denial should bar subsequent certification attempts not only by the prior named plaintiffs, but also by the class attorneys. As a result, while individual members of the potential class may subsequently seek certification, they may not do so with the original class attorneys as their legal representatives. Our proposed solution flows from a...