CLASS ACTIONS AND THE COUNTERREVOLUTION AGAINST FEDERAL LITIGATION.

Author:Burbank, Stephen B.
Position:A - Special Issue on Class Actions
 
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INTRODUCTION 1406 I. THE MODERN CLASS ACTION 1499 II. THE RESPONSE OF THE EXECUTIVE AND CONGRESS 1504 III. THE RULEMAKERS' RESPONSE 1511 IV. THE SUPREME COURT'S RESPONSE 1517 CONCLUSION 1528 "To a hammer, everything looks like a nail. And to a Court bent on diminishing the usefulness of Rule 23, everything looks like a class action, ready to be dismantled." (1)

INTRODUCTION

Research in multiple disciplines has established that the role of litigation and courts in the creation and implementation of public policy in the United States has grown dramatically (2) Central to this revolution were (1) an outpouring of rights-creating federal statutes, many of which contained attorney's fees or damages provisions that were designed to stimulate private enforcement, (3) and (2) the modern class action, born around the time when Congress began ramping up statutory private enforcement regimes.

Although the consequences and normative implications of this revolution have been the focus of intense debate, (4) scholars have neglected systematic examination of the counterrevolution against private enforcement that ensued. Our recent work seeks to fill this gap in the literature by assessing the counterrevolution from an institutional perspective. In a series of articles (5) and a book, (6) we document how the Executive Branch, Congress and the Supreme Court--wielding both judicial power under Article III of the Constitution and delegated legislative power under the Rules Enabling Act (7)--have fared in efforts to reverse or dull the effects of statutory and other incentives for private enforcement. (8) In this Article we focus specifically on class actions, situating their consideration in the framework, and fortifying it with data, that we have developed as part of that project.

In our work addressing the larger phenomenon, we find that the counterrevolution became essentially a partisan project beginning with the first Reagan Administration. (9) Recognizing the political infeasibility of retrenching substantive rights, the movement's strategy was to undermine the infrastructure for enforcing them. We show that the project was undertaken in earnest but largely failed in the elected branches, where efforts to diminish opportunities and incentives for private enforcement by amending federal statutory law were substantially frustrated. (10) We also show that, although Chief Justices appointed by Republican presidents have hoped to bring about major retrenchment through amendments to the Federal Rules of Civil Procedure, success has proved elusive and episodic, despite appointments that caused the Advisory Committee to be dominated by Republican-appointed judges and practitioners representing business. (11) We then document the sharply contrasting success of the counterrevolution in the federal judiciary. (12) Over the past four decades, incrementally at first but more boldly in recent years, the Supreme Court has transformed federal law from friendly to unfriendly, if not hostile, to the enforcement of rights through private lawsuits. (13)

We offer an institutional account of why conservative judges on a court exercising judicial power succeeded where their ideological compatriots in Congress, the White House, and the primary rulemaking committee largely failed. In doing so, we emphasize distinctive institutional properties of the judiciary. First, the Court is governed by a streamlined decisional process and simple voting rules, making it capable of unilateral action on controversial issues. Second, life-tenured federal judges are largely insulated from the forces and incentives of democratic politics, providing the Court with considerable freedom to act decisively on divisive issues. Third, in eras of divided government and party polarization, the Court faces less credible threats of statutory override, thus enjoying more policymaking discretion. Fourth, the law governing or driving private enforcement, perceived by most observers as legalistic and technical, provides the Court with a pathway to retrenchment that, as we demonstrate empirically, is remote from public view. This subterranean quality is reinforced by the slow-moving, evolutionary nature of case-by-case policy change. (14)

We focus here on one particular instrument of private enforcement, but we do so in the light of our broader research. We begin with a sketch of the modern class action. We then consider how attempts to curb its enforcement potential have fared in the elected branches, at the hands of those who brought it forth--the Advisory Committee on Civil Rules--and, finally, in the decisions of the Supreme Court. We conclude that institutional patterns in class actions largely track the story we discern in our larger project: the Supreme Court has been the most successful institutional agent in retrenching law that governs or influences private enforcement. In other words, it is not just "the usefulness of Rule 23" that conservative Justices have been "bent on diminishing," (15) but the usefulness of statutory provisions and other legal rules that promote private enforcement in general.

  1. THE MODERN CLASS ACTION

    The original Federal Rules of Civil Procedure were drafted by an advisory committee appointed by the Supreme Court. In 1934, the Court was authorized to prescribe "general rules" of practice and procedure for the federal courts under a statute delegating federal legislative power. (16) Previously, federal class actions had been permitted in a limited set of circumstances based on the practice of courts of equity in England. (17) The class action rule that the Court promulgated in 1938 divided the world of group litigation into three parts, which came to be called "true," "hybrid," and "spurious" class actions. (18) The classification turned on an analysis of the abstract nature of the rights involved that often verged on the metaphysical. (19) For this and other reasons, class actions did not play a major role in federal litigation from 1938, when the original Federal Rules of Civil Procedure became effective, until 1966.

    In that year, amendments to the Federal Rules became effective that initiated a sea change in the use of group litigation. The Advisory Committee's stated agenda in revising Rule 23 was largely uncontroversial. (20) In connection with the rule on class actions, as with other joinder rules, they sought to turn federal jurisprudence from abstract inquiry to functional analysis that considers the practical as well as the formal legal effects of litigation. (21) To that end, in Rule 23(a) they specified four requirements applicable to all litigation if it was to proceed as a class action--colloquially referred to as numerosity, commonality, typicality, and adequacy of representation. (22) But in Rule 23(b), they also reformulated the categories appropriate for class action treatment and specified different procedural requirements depending on the category.

    It was the third category (Rule 23(b)(3)) that marked the 1966 amendments to Rule 23 as a notable break from the past. Here, a court may certify a case as a class action if it finds that "the questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy." If the court does so certify, Rule 23 requires that notice be given to the members of the class and that they thereby be given an opportunity to opt out of the action, avoiding its preclusive effects. (23)

    Although the Advisory Committee could not have foreseen all of the effects of their handiwork in Rule 23(b)(3), (24) they recognized that this provision would enable some claimants for whom individual litigation would be economically irrational (those with "negative value claims") to band together in group litigation against a common adversary. Contrary to the view espoused by the Supreme Court (25) (and many commentators), however, this was not the Advisory Committee's main purpose in 23(b)(3). (26)

    The Court's interpretation is difficult to square with the Advisory Committee Note, which foregrounds the goal of "achiev[ing] economies of time, effort, and expense, and promot[ing] uniformity of decision as to persons similarly situated." (27) Class actions packaging negative value claims create litigation; they do not make existing or prospective litigation more efficient or consistent. (28) The Court's interpretation is even more difficult to square with Rule 23(c)(2)'s requirement that individual notice be given to members of (b)(3) classes who can be identified with reasonable effort. For most people with small claims, notice and an opportunity to opt out are hardly important, while paying for notice may present insuperable financial obstacles for those representing the class. (29) Finally, the record of the Committee's deliberations does not support the Court's assertion Amchem. (30)

    Through the addition of Rule 23(b)(3) for cases seeking monetary relief, the 1966 amendments greatly expanded the territory in which the common fund exception to the American Rule could operate. Moreover, amended Rule 23 immediately overlaid pre-1966 statutory private enforcement regimes and became part of the background against which subsequent regimes were constructed. Inserted into a legal landscape that had previously known them only in the wings, class actions soon occupied center stage, functioning as a kind of private enforcement "wild card... divorced from the statutes and administrative regulations that are the authorized sources of regulatory policy." (31)

    As evidenced by the legislative responses to amended Rule 23 in the 1970s that we discuss in Section III, (32) it did not take long to recognize that the small-claims class action presents a difficult public policy dilemma. On one view, that dilemma is how to provide sufficient access to...

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