"VITAL" STATE INTERESTS: FROM REPRESENTATIVE ACTIONS FOR FAIR LABOR STANDARDS TO POOLED TRUSTS, CLASS ACTIONS, AND MDLS IN THE FEDERAL COURTS.

Author:Resnik, Judith
Position:Multi-district litigation - Special Issue on Class Actions
 
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  1. CONSTITUTIONALIZING AGGREGATE LITIGATION 1766 II. COLLECTIVELY DEPENDENT 1768 III. COURTING COLLECTIVITY: ACCESS SUBSIDIES, LITIGATION INCENTIVES, AND EFFICIENCY BOOSTS 1783 A. "By any one or more employees for and in behalf of himself or themselves and other employees similarly situated": The Fair Labor Standards Act 1783 B. Due Process Shifts: Mullane, the Puzzle of Notice, and the Ambitions of Rule 23 1787 IV. THE SUCCESS OF AGGREGATION AS THE NORM: THE CASE OF THE TORT AND THE EXPANSION OF MULTI-DISTRICT LITIGATION 1796 V. REVISITING THE REGULATION OF CLASS ACTIONS AND MDL AGGREGATES TO CRAFT NEW RULES FOR REMEDIES 1805 I. CONSTITUTIONALIZING AGGREGATE LITIGATION

    Narratives of class actions identify the 1966 reforms of Rule 23 as liberating aggregation. But the key decision enabling today's aggregates dates from the early 1950s when the Supreme Court, in service of protecting what it saw to be a "vital state interest," relaxed the strictures of the Due Process Clause to enable banks to preclude subsequent claims by beneficiaries of pooled trusts. In the 1960s, rule drafters built on that model to deploy federal courts to do other kinds of work, including facilitating lawsuits for groups of civil rights plaintiffs and consumers who could not have pursued cases individually.

    This Article maps the transformation of constitutional understandings of what due process permits by putting these expanding views into the context of the changes in the federal docket during the past half century. In the 1940s, jurists interpreting the representative action provisions of the Fair Labor Standards Act thought individuals who had not personally agreed to be part of those cases could not be bound by the results. A key shift occurred in 1950 when the Supreme Court approved binding beneficiaries to protect banks pooling trust funds. (11) But Rule 23 went further and created a broader mechanism to bind absentees without their affirmative consent or their participation at the inception of a lawsuit. Through analyzing unpublished memos by Rule 23 drafters, I show how remarkably successful they were in displacing once conventional constitutional wisdom by disentangling autonomy, consent, and individualization in litigation from the strictures of the Due Process Clause.

    Not only did Rule 23 embed expansive readings of due process that had been thought a few decades earlier to be impossible, Rule 23 so deeply normalized aggregate processing that it became commonplace for the very cases--mass torts--presumptively exempt in the 1960s. One marker of that change comes from 2015, when the related aggregate form of multi-district litigation (MDL) accounted for almost forty percent of the federal courts' docket of pending civil cases, and product liability cases were ninety-two percent of the individual actions clustered within the MDL docket.

    The rise of aggregation intersects with other shifts in courts, as judicial promotion of settlement along with other forms of alternative dispute resolution came to the fore. Most of these managerial and settlement efforts take place outside public courtrooms. The mix of cases has also changed and, during the last decade, the number of unrepresented litigants has swelled. Individuals without lawyers file a quarter of the civil cases annually brought to the federal courts.

    In the 1990s, conflicts over the propriety of class actions gained intensity Congress banned legal service lawyers from bringing class actions and constrained the use of prison and securities class actions. In 2011, the Supreme Court licensed a broad evisceration by interpreting the Federal Arbitration Act (FAA) to permit job applications and consumer forms to ban aggregation.

    The preclusion of class actions through the FAA and the prevalence of aggregation share a conceptual predicate: legally-constructed, rather than actual, consent. The individuals affected are not the authors of the terms under which their rights are decided. Yet the reasons for doing so diverge. Class action bans impose costs on the pursuit of rights by cutting off access to courts and suppressing information relevant to other potential claimants. Class actions and MDL proceedings aim to enable access to remedies through group-based redress in a public forum.

    During the past fifty years, discussions of aggregation have been laced by two motifs: utility and hostility. In 2017, Congress launched yet another attempt to derail class actions as well as to limit tort-based MDLs. But criticism of aggregation ought not distract its proponents from considering how to respond to the experiences over the decades with aggregate practices. The legitimacy of court-based judgments has been keyed either to direct participation or adequate representation of absentees' interests. Since its inception, discussions of Rule 23 have focused on the similarities and the differences across claimants at two points--certification of classes and approvals of settlements.

    "Vital" state interests need again to be brought into focus to require making patent--rather than opaque--decisions to shape distribution systems under the rubric of class actions and MDLs, so as to bring into focus the challenges, after settlements are crafted, of responding to diverse interests. Putting those issues under the court's aegis and before the public's eye can shift (again) constitutional understandings of what courts can and should do.

  2. COLLECTIVELY DEPENDENT

    Five facts about the docket and doctrine of the federal courts inform my reflections on the fiftieth anniversary of the modern class action. Filings have flattened; significant proportions of pending cases are aggregated through multidistrict litigation; large numbers of unrepresented litigants file cases; doctrines have constricted the availability of class actions; and almost no trials, as well as much else, take place in public proceedings in the federal judicial system.

    First, filings in the federal court system, which had more than doubled between 1970 and 1985, have experienced little growth in the last three decades. The details are in Figure 1, a graph of federal district court filings between 1970 and 2015. (2)

    During the past fifteen years, civil and criminal filings have held steady ranging from between 300,000 and 360,000 cases per year. In 2015, 279,036 civil cases were filed, and the federal government brought more than 60,000 criminal cases, (3) a significant proportion of which involved multiple defendants. (4)

    In contrast to flattened filings, the number of pending civil cases, tracked in Figure 2, more than tripled between 1970 and 2015. As of 2015, 341,813 cases were pending. But thousands of these cases are not dealt with individually.

    Rather, a second key fact about the federal courts is that, in addition to an unknown number of cases certified as class actions,' tens of thousands of cases are clustered together under the 1968 "multidistrict litigation" (MDL) statute. (6) Based on findings by the Judicial Panel on Multidistrict Litigation (JPML) that the statutory criteria for pre-trial aggregation are met ("civil actions involving one or more common questions of fact. . . pending in different districts"), (7) the Panel transfers the cases to a single judge. The result is an uneven pattern of assignments around the United States, given that, as of the fall of 2015, almost forty percent of pending federal civil cases were part of MDLs. (8)

    The growth in the aegis of MDL is significant, as is charted in Figure 3, focused on the numbers of cases consolidated through MDLs, and in Figure 4, comparing the numbers of pending federal civil cases to those within MDLs. (10)

    In 1991, fewer than 2232 cases (or about one percent of the civil docket) were part of MDL proceedings. (11) By September 2015, of 341,813 federal civil cases pending, (12) 132,788 were concentrated in 247 proceedings aggregated before a single judge. (13) In 2015, some 150 judges were assigned one MDL, twenty-eight had two MDLs each, and ten had three or more, some of which involved different manufacturers of a product alleged to be harmful. (14)

    The third structural fact is illustrated in Figures 5 and 6, charting the filings by litigants who are not represented. Lawyers are absent in a significant portion of the federal civil docket.

    As the graphs illustrate, by 2015, more than twenty-five percent of the plaintiffs filing civil cases in federal courts did so without counsel at the trial level, (17) and on appeal more than fifty percent of litigants did. (18) Disaggregated by circuits, the range ran from about a third to sixty-four percent of the filings. (19) These numbers included both thousands of prisoner filings and many cases brought by people who were not incarcerated. (20)

    Fourth, the use of class actions has been limited by statutes, by Supreme Court interpretations of Rule 23, and by the Court's reading of the 1925 Federal Arbitration Act (FAA). (21) Constraints on class actions date back to the 1970s when, in Risen v. Carlisle & Jacquelin, the Supreme Court insisted that under the then-recently-amended Rule 23, plaintiffs provide and pay for notice to individual class members. (22) That requirement priced some lawyers out of the class action market.

    Major inroads into class action practice came in 1996, when Congress deprived the neediest litigants of ready access to class actions. Altering rules governing the Legal Services Corporation, Congress banned recipients of LSC funds from bringing class actions. (23) In the same year, Congress enacted the Prison Litigation Reform Act (PLRA), which limited access to relief for prisoners and imposed new costs on prison-conditions class actions. (24) Congress provided that defendants and interveners could move to terminate injunctive relief (including longstanding consent decrees). (25) Congress further limited the fees that lawyers for prisoners could be paid. (26)

    Congress also enacted the Private...

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