Controlling Unconstitutional Class Actions: A Blueprint for Future Lawsuit Reform

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Class actions, as currently constituted, are aprocedural nightmare. Instituted to combine similarlegal claims into a single court proceeding, theclass device has evolved into a radical tool (1) forgovernment redistribution of wealth and (2) forsubversion of individual rights. Here’s why: Themodern class mechanism often forces innocentdefendants to "settle" claims, that is, to redistributewealth to lawyers and a class of consumers,without regard for plaintiffs' responsibility fortheir own injuries. Courts pave the way for suchsettlements by depriving defendants of legaldefenses to which the law entitles them. By makingit hard to fight the litigation, courts proddefendants to settle.

Coercion of defendants in this manner is aconstitutional problem. The Due Process Clausesof the Fifth and Fourteenth Amendments requirecourts to apply the law predictably and impartially.Yet, when courts disregard the legal rights ofclass action defendants in the interest of coercingthem to settle, they upset expectations about thelaw’s content for plaintiffs' benefit.

Unfortunately, the Class Action Fairness Actdoes not address this problem. It merely drawsmore of these actions into federal court. Yet, studiessuch as one published by RAND in 2000 suggestthat federal judges are not more likely to protectdue process rights in class proceedings -- suggesting,in turn, that the Class Action Fairness Act will disappointits supporters. Without further reform -- far more aggressive than Congress has considered -- unconstitutional class action proceedings, and thesettlements they coerce, will continue.

At a minimum, controlling unconstitutionalclass actions requires Congress to change federalclass action rules. Necessary changes include (1)requirements that absent class members "opt in"before they are counted as part of the class andthat courts assess the merits of legal claims beforeauthorizing their litigation in the form of a classaction and (2) a ban on class treatment of lawsuitsin which key elements can be proven only ona case-by-case basis.

Changing federal class action rules is only apartial solution. Congress must also give federalcourts more power to control constitutionallyproblematic class actions filed in state court. Itcan do so by authorizing defendants to removeclass suits raising due process problems into federalcourt when state courts don't adequately protectlitigants' due process rights. The latter reformnot only is consistent with the Supreme Court'sunderstanding of federalism and separation ofpowers but will give states greater incentives toreform their local class action procedures.

Mark Moller

Mark Moller is a senior fellow at the Cato Institute and editor in chief of the Cato Supreme Court Review.