Justice Scalia and class actions: a loving critique.

AuthorFitzpatrick, Brian T.
PositionAntonin Scalia

INTRODUCTION

I have been asked to write an essay on Justice Scalia's class action jurisprudence and although I suspect many readers will find this surprising because the Justice is so often linked to constitutional law, I actually think that his class action jurisprudence may be where his opinions leave some of the biggest marks. To be as blunt about it as the Justice himself would have been: for better or for worse, I am not sure any other Justice of the Supreme Court in American history has done more to hinder the class action lawsuit than Justice Scalia did. (1)

The Justice did his damage not so much in his opinions interpreting the Federal Rules of Civil Procedure--there, his opinions gave both sides of the class action divide something to like--but in his opinions interpreting the Federal Arbitration Act (FAA). Under the auspices of the FAA, the Justice authored two majority opinions giving a green light to corporations that want to opt out of class-wide liability entirely so long as they do so using arbitration contracts. (2)

I am one of the Justice's biggest fans. But his FAA opinions are not my favorites of his opinions. As many commentators have noted, it is very hard to square these opinions with either the text or the history of the FAA.

For these reasons, many commentators have assumed that Justice Scalia was more animated by his conservative ideological preferences in these cases than to his fidelity to the original understanding of the text. That may be-- although the Justice tried very hard to separate his personal views from his jurisprudential views, he was not superhuman--but, if it is what motivated these decisions, I am not sure the Justice got it right on this point either. On a superficial level, of course, conservatives tend to side with the interests of corporations and liberals with the interests of plaintiffs' lawyers. But not always. There are plenty of times when conservative principles deviate from corporate interests. As I explain, I wonder if class action waivers should be one of these times. In my view, it is hard to see how the conservative (and, often, libertarian) free market principles that Justice Scalia and I shared suggest that corporations should be allowed to opt out of class action lawsuits.

In Part I of this Essay, I review the Justice's class action opinions; I give special emphasis to his opinions interpreting the FAA and explain why I think it is hard to square those decisions with either text or history. In Part II, I explain why I think even conservative and libertarian ideology may not be consistent with the Justice's FAA opinions.

I.

Justice Scalia authored dozens of opinions in class action cases, but only six of these opinions--five opinions for the Court and one dissent--were about class actions. (3) Four of these opinions interpreted the Federal Rules of Civil Procedure--Wal-Mart Stores, Inc. v. Dukes, (4) Comcast Corp. v. Behrend, (5) Shady Grove Orthopedic Associates, P.A. v. Allstate Insurance Co., (6) and Devlin v. Scardellett (7)--and two of them interpreted the FAA--American Express Co. v. Italian Colors Restaurant (8) and AT&T Mobility LLC v. Concepcion. (9) As I said, the former opinions are something of a mixed bag, but the latter opinions could not have done more to undermine class aggregation. (10)

A.

Let me begin with the cases interpreting the Federal Rules. Here, Justice Scalia made things a bit harder for class actions in Wal-Mart and Comcast, but a bit easier in Shady Grove. And he would have made things even easier still in Devlin had he not ended up in the dissent.

  1. Of these opinions, Wal-Mart, is by far the most famous. There, Justice Scalia decertified a nationwide class of 1.5 million current and former female employees of Wal-Mart who had sued the merchant for sex discrimination. (11) The opinion is most famous (or infamous, depending on your point of view) (12) for ratcheting up the requirement in Federal Rule 23(a)(2) that all members of a class have at least one question of fact or law in common before the class can be certified (known as the "commonality" prerequisite). But I have always found the account of this part of his opinion overstated. Despite the sharp ideological division in the judgment, there was really very little difference between how Justice Scalia interpreted "commonality" and how Justice Ginsburg did so in dissent; (13) the sharp disagreement rested more on how to interpret Title VII of the Civil Rights Act than on how to interpret Rule 23. (14)

    Rather, I have always thought that the more important part of Justice Scalia's opinion was the unanimous holding that class actions seeking both money damages and declaratory or injunctive relief (known as "hybrid" class actions) can be certified only under Rule 23(b)(3). (15) For many years, class action lawyers had been smuggling certification of money damages class actions into the Rule for declaratory and injunctive class actions (Rule 23(b) (2)) and thereby evading the more difficult prerequisites to class certification found in Rule 23(b) (3). (16) That practice has now come to a halt. Even still, the class action bar has not been much deterred. (17)

  2. Justice Scalia's opinion in Comcast is also less significant than the sharp ideological division in the case might make it seem. The upshot of his opinion was that class action lawyers could not rely on experts at the class certification stage whose models did not match the class's legal theory. (18) In Comcast, the expert attempted to show why damages could be proven on a class-wide basis (thereby satisfying the predominance prerequisite of Rule 23(b)(3)), but the expert's model was based on the aggregation of four different antitrust theories, and only one of the theories had survived in the case. (19) It is hard to argue with Justice Scalia's view here, and the dissent did not so much argue with it as it did with the procedural somersaults the Court performed to get to the question in the first place. (20) Again, if Justice Scalia's opinion has had any effect on the plaintiffs' bar at all, it has been only a modest one. (21)

  3. On the other side of the ledger is Shady Grove, where Justice Scalia's plurality opinion decided that the famous doctrine from Erie Railroad Co. v. Tompkins (22) forbids states from exempting their statutory damages causes of action from the federal class action device. (23) Despite the lack of ideological division in the vote in this case, I think what Justice Scalia had to say here was actually more significant than what he said in either Wal-Mart or Comcast. I say this because corporate class action enemy number one at the moment is the statutory damages class action. (24) For good reason. By design, statutory damages overcompensate plaintiffs in order to induce enough of them to sue individually to deter defendants from misconduct. (25) No one enacting these statutes wanted every plaintiff to sue; that would result in massive overdeterrence.2b Yet, that is exactly what happens when statutory damages are sought in a class action, and Justice Scalia's opinion basically says that state legislatures are unable to do anything about it--even when the class actions are born of state law causes of action--short of repealing their statutory' damages remedies altogether, for individual cases as well as class cases.27 That is a tough sell in state legislatures. Thus, Justice Scalia's opinion would have left corporate America without relief from its number one complaint about the class action system. Thankfully for corporate America, Justice Scalia's opinion commanded only four votes; Justice Stevens's concurring opinion gives state legislatures more leeway. (28) In any event, Shady Grove reminds us that, even in the class action space, Justice Scalia was more sophisticated than a reflexive vote for corporate interests.

  4. Justice Scalia's dissenting opinion in Devlin is even more confirmation of that point. There, the Court decided that class members who did not like a class settlement and who filed objections thereto could take an appeal of the approval of settlement. (29) As Justice Scalia's dissent predicted, (30) the Court's decision spawned what is known as the "objector blackmail" industry, where class members file objections only in order to take appeals only in order to delay final resolution of the settlement only in order to induce class action lawyers--eager to get their fees as soon as possible--to pay them to drop their appeals. (31) Justice Scalia thought that absent class members who filed objections had no right to appeal because they were not "parties" to the judgment as required by the Federal Rules of Appellate Procedure. (32)

    I have always found it very hard to argue with his analysis--no doubt in large part because I worked on the case with him!--and, had his views prevailed, it would have been much more difficult for absent class members to extract side payments from class counsel. Because these side settlements are secret, it is hard to know exactly how much money Justice Scalia's views might have saved class action lawyers, but, in my experience, the sums class action lawyers feel compelled to pay in big cases can be very substantial--sometimes into the seven figures for a single objector. Indeed, the objector blackmail problem has become so pervasive and expensive that the federal rule-makers have now proposed amending Rule 23 to make it more difficult (but not impossible, as I had hoped) (33) for objectors to collect these payments by requiring any side payment to be approved by the district court judge who approved the class action settlement. (34) Again, this was another case where Justice Scalia's views would have given the plaintiffs' bar reason to cheer had those views prevailed.

    B.

    As such, both sides can find something to like in the Justice Scalia of the Federal Rules. Not so the Justice Scalia of the FAA. His two FAA decisions have done more to...

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