Taylor v. Sturgell, procedural due process, and the day-in-court ideal: resolving the virtual representation dilemma.

• Author: Redish, Martin H.

INTRODUCTION

The notion that the individual litigant possesses a foundational constitutional right to his day in court before his rights may be judicially altered has long served as a guide for the shaping of modern procedure. (1) In no area of procedure has this ideal traditionally played a more important role than the field of judgments. Virtually every first-year law student has learned that due process generally prevents a court from imposing either res judicata or collateral estoppel against litigants not represented in the prior litigation. (2) To be sure, there exists a narrow group of well-accepted qualifications that allow a nonparty to be bound when he is in privity with a prior party (3) and respected scholars have occasionally challenged the precept's validity. (4) However, the day-in-court limitation on the imposition of res judicata and collateral estoppel has generally withstood the test of time--that is, until the development of the doctrine of so-called "virtual representation."

Virtual representation is a preclusion doctrine that permits a litigant to be bound by a judgment in a prior case in which she was not a party. (5) Unlike the other primary forms of nonparty preclusion, virtual representation (at least in some of its manifestations) does not require a preexisting legal relationship between the nonparty and a party in the case in order to bind the nonparty by the case's findings and judgment. Instead, the nonparty is bound if her interests are deemed to have been sufficiently aligned with a party in the prior case and certain other factors are satisfied, (6) even if there is no preexisting formalized relationship between them. As of the start of 2008, the definition of virtual representation varied widely among the federal circuits, with at least one circuit disapproving its use almost entirely. (7)

Virtual representation is in direct tension with the day-in-court ideal. By its very nature, the doctrine deprives litigants of their right to a day in court by binding them to judgments in cases in which they were not parties and in which they did not have the opportunity to defend their own interests. Because of this tension with the day-in-court rule, virtual representation has been the subject of controversy in the lower courts since its inception.

The Supreme Court provided important guidance on the viability of virtual representation in its 2008 opinion in Taylor v. Sturgell. (8) After recognizing the inherent clash between the day-in-court ideal and the doctrine of virtual representation, the Court recognized significant tension between the doctrine and the dictates of due process. (9) Specifically, it unanimously rejected the D.C. Circuit's multifactor balancing test for virtual representation. (10) In doing so, however, the Court quite clearly signaled the demise of all versions of virtual representation. For reasons we subsequently explore, (11) the Court was correct to reject virtual representation as a general matter. In most cases, the doctrine unconstitutionally undermines the individual's due process right to his day in court--a doctrine whose value has generally been ignored by those courts and scholars who have advocated some form of virtual representation. However, the Court in Taylor failed in two important ways: Initially, it failed to articulate the true constitutional grounding for the day-in-court ideal, thereby leaving itself vulnerable to the charge of some that it has overvalued this right. On the other hand, somewhat paradoxically, the Court simultaneously overvalued the day-in-court ideal, by rejecting virtual representation even in cases of indivisible relief, where the harm from failing to employ the doctrine could well outbalance the harm from using it.

The concept of indivisible relief refers to cases in which the relief sought by multiple parties from the same defendant demands that the defendant take singular action--in other words, that the defendant cannot, either legally or physically, provide wholly separate, disjointed, or inconsistent relief to the various plaintiffs. For example, when a municipality's ability to issue a bond is challenged in separate suits, it is impossible for the municipality to issue the bond in one suit, but not issue it in another suit; either the municipality issues the bond, or it does not. (12) Similarly, in the case of Supreme Tribe of Ben-Hur v. Cauble, (13) a fraternal benefit organization sought a financial reorganization, which was challenged in separate suits by different policyholders. (14) In this situation, either the organization financially reorganized, or it did not; it could not reorganize as to certain plaintiffs while simultaneously failing to reorganize as to others. In these situations, allowing separate suits could establish what Rule 23(b)(1)(A) of the Federal Rules of Civil Procedure, concerning class actions, describes as "incompatible standards of conduct." (15) It is important to distinguish this situation from damage suits, where a defendant could, both practically and legally, be made to pay damages to some plaintiffs but not to others. (16) In situations of indivisible relief, it is quite conceivable that allowing separate suits to result in "incompatible standards" could cause severe hardships to a defendant. In these situations, not binding subsequent plaintiffs to the result in the first suit through virtual representation might threaten the defendant's due process rights, and at the very least threaten sub-constitutional interests in reason and fairness.

Procedural due process has long been thought to involve a balancing of competing interests: the value of providing a given procedure is balanced against the cost, either to the state or to one of the parties, of providing it. (17) For the overwhelming majority of cases, the significant value of providing a litigant with her day in court outweighs the costs in providing it. Indeed, this calculus is so simple in most cases that a commitment to the provision of a day in court has become the presumptive rule. However, in multiple suit situations involving claims for indivisible relief, the issue is far more complex.

In this Article, we tackle the two glaring omissions in the Taylor Court's analysis of virtual representation: its failure to explain the theoretical grounding of the day-in-court ideal in American constitutional and political theory and its failure to explore the implications of indivisible relief for the viability of virtual representation. In Part I, we explore the facts and holding of Taylor. In Part II, we fashion a theoretical explanation of the day-in-court rule. We conclude that the day-in-court rule springs from society's democratic commitment to the precept of process-based autonomy. Just as the government cannot dictate to individuals how to participate politically in the democratic process, individuals should not be forced to defer to the judgment of others when pursuing their legal rights. Like political participation rights such as freedom of expression, the value of litigant autonomy is extremely high but not absolute. (18) In Part III, we explore the concept of indivisible relief and its implications for virtual representation. Indivisible relief, we believe, can be subdivided into three categories: inconsistent liability, double liability, and contradictory liability. Each situation raises unique due process concerns that could be substantially avoided by use of virtual representation. After conducting a detailed due process analysis, we conclude that the value of avoiding the problems associated with double and contradictory liability is sufficiently significant to outweigh the competing value of litigant autonomy, and therefore virtual representation may be employed to avoid these problems. (19) It should be emphasized, however, that the threat of double or contradictory liability is necessary but not sufficient for virtual representation to pass due process scrutiny. As our analysis will show, virtual representation also requires a showing that the absent party has been adequately represented by a present party. Only if both conditions are satisfied should virtual representation be permitted.

In Part IV, we consider prophylactic measures that might be employed to avoid the entire dilemma caused by the problems associated with indivisible relief. Despite the conclusion that our limited recognition of virtual representation--confining its use to situations where failure to invoke it would produce intolerable results to opposing parties--satisfies due process, it nevertheless has the harmful effect of depriving litigants of their day in court and should therefore be avoided if at all possible.

1. VIRTUAL REPRESENTATION IN THE COURTS

   Our legal system employs a presumption that each person has a right to her day in court. This ideal is most easily seen in the binding effect of judgments. The doctrines of res judicata and collateral estoppel preclude parties from relitigating claims or issues that have reached a final judgment. Because of the day-in-court ideal, these preclusion doctrines typically bind only the parties in the underlying suit; in most situations, imposition of a preclusive impact on a nonparty is deemed to violate due process. (20) In certain situations in which a formal prelitigation arrangement exists between a party and a nonparty, however, the nonparty may be bound. These prelitigation arrangements are often classified together under the heading of "privity." (21) Although a person in privity with a party is deprived of her personal day in court, the nature of the preexisting relationship is deemed to create an exception to the presumptive day-in-court ideal.

   Virtual representation departs from these traditionally accepted limitations. Unlike traditional exceptions to the day-in-court dictate, its preclusive bar is often not grounded in a formalized prelitigation arrangement between a...