Class Warfare: the Disappearance of Low-income Litigants from the Civil Docket

• Citation: Vol. 65 No. 6
• Publication year: 2016

Class Warfare: The Disappearance of Low-Income Litigants from the Civil Docket

Myriam Gilles

CLASS WARFARE: THE DISAPPEARANCE OF LOW-INCOME LITIGANTS FROM THE CIVIL DOCKET

Myriam Gilles^*

At root, equal justice is simply the notion that law and the courts should be fair, even if life isn't.

—Justice Earl Johnson, Jr., California Court of Appeal

Abstract

In recent years, much attention has been paid to the startling disparities in income and wealth in contemporary U.S. society. The enormous concentration of economic power in the top 1% is the culmination of decades of significant income and wealth gains for the top, combined with stagnant or decreasing growth for the majority—a trend that continues apace. The implications of this wealth gap reverberate across the socio-legal landscape, but nowhere is the gap more glaring than in the civil docket, where litigation—particularly class actions brought by or on behalf of low-income consumers and employees—is on the verge of disappearing.

To be sure, the decline in class actions is only part of the larger story, as procedural and substantive constraints on legal access are visible everywhere—from problems of non-representation, to cuts in funding for legal aid and court administration, to heightened pleading standards, increasingly restrictive views of standing to sue, and the privatization of justice. But the thesis of this Essay is that the unavailability of class litigation is disproportionately more harmful to low-income groups than any other legal impairment, for a number of reasons. The first is sadly obvious: economically disadvantaged groups are more susceptible to abusive practices in the marketplace and the workplace, suffering disproportionate instances of predatory lending, consumer fraud, unfair wages, and discrimination. Without a mechanism for aggregating these low-value claims, the rights of low-income individuals would simply slip through the legal cracks, unvindicated. But, more brutally, recent studies show that, to a large and disturbing extent, the poor stay poor: when members of low-income groups suffer from group-based

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wrongdoing, they are likely to experience the same or similar wrongdoing again in the future. The failure to detect and deter bad actors who prey on the poor only promotes chronic exploitation and the perpetuation of intractable poverty. And again, class litigation is often the best or only means of bringing these claims.

This Essay ends by examining an important by-product of the disappearance of low-income claimants from the civil docket: as contemporary judges see fewer civil cases brought by or on behalf of poor people, one might expect that they will grow further out of touch with and more ill-equipped to manage these claims; and as this reservoir of wisdom empties, judicial attitudes towards the poor may harden, growing disdainful and ungenerous. Accordingly, when judges are sporadically faced with the legal claims of low-income groups, it becomes harder to spot (or easier to ignore) patterns of exploitative, abusive conduct by corporate or governmental actors.

Introduction

In recent years, much attention has been paid to the startling disparities in income and wealth in contemporary U.S. society.¹ The enormous concentration of economic power in the top 1% is the culmination of decades of significant income and wealth gains for the top, combined with stagnant or decreasing growth for the majority—a trend that continues apace.² The widening wealth gap recently led Federal Reserve Chairwoman Janet Yellin to wonder aloud whether "this trend is compatible with values rooted in our nation's history, among them the high value Americans have traditionally placed on equality of opportunity."³

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This great gap between the very rich and everyone else has grown only more pronounced in the wake of the recent financial crisis, which ravaged the value of assets held by low-income families⁴ and devastated the labor markets,⁵ as companies sent thousands of lower-skilled, labor-intensive jobs overseas.⁶ The resulting financial pressures pushed many already fragile communities over the poverty threshold,⁷ where compounding injustices have recently sparked violence and rioting.⁸

The financial crisis also generated turmoil within low-income groups relating to, among other things, consumer credit, housing, and employment—exacerbating existing economic disadvantages. For example, owing to the

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received wisdom (quite wrong as it happens) that lending to the poor was a primary cause of the recession, the credit markets available to low-income individuals came to a near-standstill by 2011. Accordingly, these groups became increasingly dependent upon unscrupulous and high-priced alternatives to traditional credit sources—i.e., payday lenders, check-cashing services, phone cards, and other predatory business practices. And escalating debt often creates problems for low-wage workers, as many employers have come to routinely run credit checks to eliminate applicants with credit problems from consideration.⁹ These successive calamities have created a downward spiral that has hampered the recovery of low-income populations, even as top income brackets have fully rebounded from losses suffered during the Great Recession.¹⁰

These disparities are projected in myriad ways across the contemporary socioeconomic landscape: fewer low-income families own their homes¹¹ or are even able to rent in decent neighborhoods (i.e., places with good schools, parks, and transportation options¹² ); fewer have ready access to the internet, fresh food, green space, or adequate medical care;¹³ fewer go to college and

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graduate;¹⁴ fewer obtain stable, middle-class jobs;¹⁵ and fewer live to old age.¹⁶ But nowhere is the gap more glaring than in the civil docket, where class actions brought by or on behalf of low-income consumers and employees are on the verge of disappearing.

Because individual lawsuits often cost more to bring than the victim would recover, class actions have historically enabled lawyers to "aggregate these small claimants into an efficient procedural vehicle for common litigation."¹⁷ For low-income groups in particular, aggregating claims has provided significant access to justice, as individual members of these groups may be "in a poor position to seek legal redress, either because they do not know enough or because such redress is disproportionately expensive."¹⁸ Equally important,

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class actions can secure relief "that is not only longer-lasting but also broader-based," of critical importance to communities that are constantly confronted with nefarious business practices.¹⁹

In prior eras, the class action device has been used to achieve precisely these ends.²⁰ But in recent decades, access to class-wide relief for low-income groups has declined precipitously. First, and most dramatically, in 1996, Congress imposed restrictions on the ability of the Legal Services Corporation (LSC)—a primary funder of civil legal aid for low-income groups—to participate in class actions.²¹ In the wake of the restrictions, LSC-funded lawyers were forced to resign from hundreds of class cases, involving hundreds of thousands of clients.²² Second, and more recently, judicial and legislative constraints have all but eliminated the availability of class and representative actions brought by private attorneys seeking to represent low-income groups to obtain damages and injunctive relief.

To be sure, the decline in class actions is only part of the larger story, as procedural and substantive constraints on legal access now litter the doctrinal landscape. The "justice gap" and problems of non-representation;²³ cuts in

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funding for legal aid²⁴ and court administration;²⁵ heightened pleading standards and expensive discovery;²⁶ increasingly restrictive views of standing to sue;²⁷ the co-opting of small claims court by businesses seeking to collect debts; the modern penchant for the privatization of justice; among many other developments have erected near-impossible obstacles in the path to the courthouse for economically disadvantaged groups. But the thesis of this Essay is that the unavailability of class litigation is disproportionately more harmful to low-income groups—in ways both real and expressive, short- and long-term—than any other single factor. The reasons, I submit, are threefold and interrelated.

First, I posit that economically disadvantaged groups are more susceptible to abusive practices in the marketplace and the workplace, suffering disproportionate instances of predatory lending, consumer fraud, unfair wages, and discrimination. This overexposure is likely the result of a confluence of factors: low bargaining power, if any; bad credit history; limited choices; and obstacles to processing information. But whatever the root causes, my argument here is simply that low-income groups are more likely to experience violations of statutory rights that give rise to class-wide and collective legal claims.

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Second, the impact of class relief is more acutely felt by low-income groups. Compensatory damages—in predatory lending, employment, and other cases—can make a discernible difference in the lives of people living on the economic margins. But of vastly greater consequence for this population is the deterrent effect of class actions upon future wrongdoers. This is because recent studies show that, to a large and disturbing extent, the poor stay poor.²⁸ A modern consequence of the "birth lottery" is that children who are born at or below the poverty line are very likely to remain there throughout their lifetimes.²⁹ As such, when members of low-income groups suffer from group-based wrongdoing, they are likely to experience the same or similar wrongdoing again in the future. Accordingly, the failure to detect and deter bad actors who prey on the poor only promotes chronic exploitation and the...