Class Actions in the Year 2026: a Prognosis

• Publication year: 2016

Class Actions in the Year 2026: A Prognosis

Robert H. Klonoff

CLASS ACTIONS IN THE YEAR 2026: A PROGNOSIS

Robert H. Klonoff^*

Abstract

In this Article, I offer my predictions on what the class action landscape will look like a decade from now. Those predictions fall into several categories:

First, I discuss whether the basic class action framework—Federal Rule of Civil Procedure 23—is likely to be revamped in the next decade. I predict that there is little chance that the basic structure of Rule 23 will change. Calls by some scholars to rewrite Rule 23 will not make headway. The only caveat is that either Congress or the Supreme Court could repudiate so-called no injury classes—i.e., classes in which some unnamed class members suffered no harm—a result that would not change the text of Rule 23 but would adversely impact certain kinds of class actions, such as consumer cases.

Second, I examine the likely state of class action jurisprudence in the year 2026. In that regard, I make several predictions: (1) Securities class actions will continue to flourish, and significant public interest class actions seeking structural relief will continue to be certified. (2) On the other hand, consumer, employment, and personal injury class actions will continue to decline. (3) Notwithstanding the Supreme Court's decision in Tyson Foods, Inc. v. Bouaphakeo, which upheld the use of statistical proof in a classwide suit for overtime pay, defendants will aggressively seek to limit the ability of plaintiffs

[Page 1570]

to establish liability or damages through expert statistical sampling. (4) The "ascertainability" requirement imposed by the Third Circuit will be repudiated by the Supreme Court or by the Third Circuit itself (5) Although the Supreme Court in Campbell-Ewald Co. v. Gomez held that an unaccepted offer of judgment under Rule 68 did not moot the plaintiff's claim (and thus did not moot the putative class claims brought by the plaintiff as class representative), the Court reserved important issues for a later day. The decision thus ensures that the defense bar will continue to search for ways to pick off class representatives. (6) Defendants will advance several arguments against class certification that, until now, have had only limited success. These will include expansive applications of Rule 23's typicality, predominance, and superiority requirements. Although defendants will not be fully successful with these arguments, they will succeed in erecting some additional barriers to class certification. (7) During the next decade, courts addressing class certification and the fairness of settlements will give greater weight to allegations of unethical behavior by class counsel and by counsel representing objectors to settlements. (8) The future of class actions will ultimately rest in the hands of a small number of appellate court judges with special interest and expertise in aggregate litigation.

Third, I focus on the administration and resolution of class actions and offer two predictions: (1) by 2026, a significantly larger number of class action cases will go to trial than at any time since 1966; and (2) technological changes will fundamentally alter the mechanics of class action practice, offering more sophisticated tools for notice, participation by class members, and distribution of settlement proceeds.

Introduction

In my 2013 article, The Decline of Class Actions, I explained that, starting in the mid-1990s, federal courts began to erect significant barriers to class certification.¹ Underlying that trend, I argued, was a fear among many judges that even meritless class actions had coerced defendants to agree to massive settlements.² I did not pronounce class actions dead, but I did express concern that they had been seriously eroded.³ In this Article, which coincides with the

[Page 1571]

fiftieth anniversary of the modern class action rule,⁴ I attempt to predict what the class action landscape will look like a decade from now. That is not an easy task; as Yogi Berra once said, "It's difficult to make predictions, especially about the future."

My predictions fall into several categories. First, I discuss whether the basic class action framework—Federal Rule of Civil Procedure 23—is likely to be overhauled in the next decade. I predict that there is little chance that the basic structure of Rule 23 will change. Calls by some scholars to rewrite Rule 23 will not make headway. The only caveat to this prediction is that either Congress or the Supreme Court could repudiate so-called no injury classes—i.e., classes in which some unnamed class members suffered no harm—a result that would not change the text of Rule 23 but would adversely impact certain kinds of class actions, such as consumer cases.

Second, I examine the likely state of class action jurisprudence in the year 2026. In that regard, I make several predictions:

• Securities class actions will continue to flourish, and public interest class actions seeking structural relief under Rule 23(b)(2) will continue at a steady pace.

• Many other types of class actions, however—such as consumer, employment discrimination, and personal injury class actions—will continue to decline.

• Notwithstanding the Supreme Court's decision in Tyson Foods, Inc. v. Bouaphakeo,⁵ which upheld the use of statistical proof in a classwide suit for overtime pay, defendants will aggressively seek to limit the ability of plaintiffs to establish liability or damages through expert statistical sampling.

• The "ascertainability" requirement imposed by the Third Circuit will be repudiated by the Supreme Court or by the Third Circuit itself.

• The Supreme Court's decision in Campbell-Ewald Co. v. Gomez⁶ will not deter defendants in their efforts to design strategies for picking off class representatives through offers of judgment.

[Page 1572]

• Defendants will advance several arguments against class certification that, until now, have had only limited success. These will include expansive applications of Rule 23's typicality, predominance, and superiority requirements. Although defendants will not be fully successful with these arguments, they will succeed in erecting some additional barriers to class certification.

• During the next decade, courts addressing class certification and the fairness of settlements will give greater weight to allegations of unethical behavior by class counsel and by counsel representing objectors to settlements.

• The future of class actions will ultimately rest in the hands of a small number of appellate court judges with special interest and expertise in aggregate litigation.

Third, I focus on the administration and resolution of class actions and offer two predictions: (1) by 2026, a significantly larger number of class action cases will go to trial than at any time since 1966; and (2) technological changes will fundamentally alter the mechanics of class action practice, offering more sophisticated tools for notice, participation by class members, and distribution of settlement proceeds.

At bottom, the next decade will be a fascinating—but challenging—time for those involved in litigating class actions.

I. Possible Restructuring of Rule 23

A. No Major Structural Changes to Rule 23 Will Occur in the Next Decade

Rule 23 has generated an extensive body of case law interpreting and applying it. Much of the recent case law has been controversial.⁷ Nonetheless, subject to an important caveat discussed in Part I.B, I do not believe that there will be major structural changes to the class action device.

The current version of Rule 23 is largely unchanged from the 1966 version. The original version of Rule 23, from 1938, contained three categories of class actions: "true," "hybrid," and "spurious."⁸ Those categories, however, proved

[Page 1573]

to be deficient.⁹ The 1966 version of Rule 23 abandoned those categories and created four new types of class actions.¹⁰ Rule 23(b)(1)(A) applies when myriad individual actions would result in inconsistent standards of conduct for the party opposing the class.¹¹ Rule 23(b)(1)(B) applies when numerous separate actions would substantially impair or impede the interests of individual class members.¹² Rule 23(b)(2) applies in suits seeking primarily declaratory or injunctive relief.¹³ And Rule 23(b)(3) applies when common questions of law or fact predominate over individual questions and a class action is superior to other methods of adjudication.¹⁴ To achieve certification, a class must fall within at least one of those four categories.¹⁵ In addition, Rule 23(a) contains four criteria that plaintiffs must satisfy in every case: numerosity, commonality, typicality, and adequacy of representation.¹⁶

The current rule is not without flaws. For instance, the two (b)(1) categories are confusing, and in recent years, plaintiffs have rarely utilized them.¹⁷ Many courts have held that Rule 23(b)(1)(A) does not apply to damages suits but only to suits for declaratory or injunctive relief.¹⁸ It is thus difficult to discern any role for (b)(1)(A) that is not already covered by (b)(2). Similarly, classes under (b)(1)(B) are difficult to maintain, especially after the Supreme Court's decision in Ortiz v. Fibreboard Corp.¹⁹ which substantially curtailed plaintiffs' ability to bring "limited fund" class actions.²⁰ In addition, Rule 23(b)(2) is poorly drafted, leaving courts to figure out the important question of when (if at all) it encompasses class actions that also seek monetary relief in

[Page 1574]

addition to injunctive or declaratory relief.²¹ And the four superiority criteria of Rule 23(b)(3)(A)-(D) are confusing and difficult to apply.²² Similarly, it is hard to articulate a clear distinction between typicality (Rule 23(a)(3)) and adequacy of representation (Rule 23(a)(4)), both of which ultimately turn on the ability of the class representative to represent the class.²³ It is difficult to envision a situation in which a class...