Class action
A class action, also known as a class action lawsuit, class suit, or representative action, is a type of lawsuit where one of the parties is a group of people who are represented collectively by a member or members of that group. The class action originated in the United States and is still predominantly an American phenomenon, but Canada, as well as several European countries with civil law, have made changes in recent years to allow consumer organizations to bring claims on behalf of consumers.
Description
In a typical class action, a plaintiff sues a defendant or a number of defendants on behalf of a group, or class, of absent parties. This differs from a traditional lawsuit, in which the plaintiffs sue one or more defendants, and all of the parties are present in court. For example, a group in a class action lawsuit could be any person who ever bought a specific dangerous product; in a traditional lawsuit, the plaintiff is a single individual person or business that bought the dangerous product.Although standards differ across states and countries, class actions are most common where the allegations involve at least 40 people whom the same defendant has injured in the same way. Instead of each individual person bringing their own lawsuits separately, the class action allows the claims of all class members—whether they know they have been damaged or not—to be resolved in a single proceeding through the efforts of the representative plaintiff and appointed class counsel.
History
England and the United Kingdom
The antecedent of the class action was what modern observers call "group litigation," which appears to have been quite common in medieval England from about 1200 onward. These lawsuits involved groups of people either suing or being sued in actions at common law. These groups were usually based on existing societal structures like villages, towns, parishes, and guilds. Unlike modern courts, the medieval English courts did not question the right of the actual plaintiffs to sue on behalf of a group or a few representatives to defend an entire group. Stephen C. Yeazell has theorized that the most likely reason is that the abysmally poor transportation, communications, and administrative apparatus of medieval England meant it was impossible for the English sovereign to manage the country in terms of individuals. It was much easier for the Crown to bluntly impose obligations upon entire groups, to be enforced through the sporadic use of force. Lawyers and judges did not question the right of a group to sue or be sued because to do so would bring into question the entire group-oriented society in which they operated.From 1400 to 1700, group litigation gradually switched from being the norm in England to the exception. The development of the concept of the corporation led to the wealthy supporters of the corporate form becoming suspicious of all unincorporated legal entities, which in turn led to the modern concept of the unincorporated or voluntary association. The tumultuous history of the Wars of the Roses and then the Star Chamber resulted in periods during which the common law courts were frequently paralyzed, and out of the confusion the Court of Chancery emerged with exclusive jurisdiction over group litigation.
Chancery jurisprudence on group litigation became increasingly incoherent after 1700. As the basis of this, Yeazell has pointed to the trends towards fragmentation and individualism in English society during that period; the resulting societal pressures ultimately led to the Reform Act 1832. The underlying problem was the shift from representation based on the presumed or implied consent of a group to representation based on a common interest, such as holding shares of a corporation.
By 1850, Parliament had enacted several statutes on a case-by-case basis to deal with issues regularly faced by certain types of organizations, like joint-stock companies, and with the impetus for most types of group litigation removed, it went into a steep decline in English jurisprudence from which it never recovered. It was further weakened by the fact that equity pleading, in general, was falling into disfavor, which culminated in the Judicature Acts of 1874 and 1875. Group litigation was essentially dead in the United Kingdom after 1850.
United States
Class actions survived in the United States thanks to the influence of Supreme Court Associate Justice Joseph Story, who imported the concept into US law through summary discussions in his two equity treatises as well as his opinion in West v. Randall. However, Story did not necessarily endorse class actions, because he "could not conceive of a modern function or a coherent theory for representative litigation." Like most Americans of his time and ever since, Story took individualism for granted, which explains why he could not understand a rule allowing a court to bind an absent person to litigation purportedly conducted on that person's behalf.The oldest predecessor to the class-action rule in the United States was in the Federal Equity Rules, specifically Equity Rule 48, promulgated in 1842.
Where the parties on either side are very numerous, and cannot, without manifest inconvenience and oppressive delays in the suit, be all brought before it, the court in its discretion may dispense with making all of them parties, and may proceed in the suit, having sufficient parties before it to represent all the adverse interests of the plaintiffs and the defendants in the suit properly before it. But in such cases, the decree shall be without prejudice to the rights and claims of all the absent parties.
This allowed for representative suits in situations where there were too many individual parties. However, this rule did not allow such suits to bind similarly situated absent parties, which rendered the rule ineffective. This flaw was a direct result of Story's inability to comprehend the old English Chancery cases on group litigation. However, Story's confusion was apparently typical of his time, as Harvard Law School dean Christopher Columbus Langdell also could not understand the old cases.
Within ten years, the Supreme Court interpreted Rule 48 in such a way so that it could apply to absent parties under certain circumstances, but only by ignoring the plain meaning of the rule. In the rules published in 1912, Equity Rule 48 was replaced with Equity Rule 38 as part of a major restructuring of the Equity Rules, and when federal courts merged their legal and equitable procedural systems in 1938, Equity Rule 38 became Rule 23 of the Federal Rules of Civil Procedure.
Modern developments
A major revision of the FRCP in 1966 radically transformed Rule 23, made the opt-out class action the standard option, and gave birth to the modern class action. Entire treatises have been written since to summarize the huge mass of case law that sprang up from the 1966 revision of Rule 23. Just as medieval group litigation bound all members of the group regardless of whether they all actually appeared in court, the modern class action binds all members of the class, except for those who choose to opt out. Arthur Taylor von Mehren characterized the American opt-out class action as the "most extreme development of collective civil litigation in the modern legal world".The Advisory Committee that drafted the new Rule 23 in the mid-1960s was influenced by two major developments. First was the suggestion of Harry Kalven Jr. and Maurice Rosenfield in 1941 that class-action litigation by individual shareholders on behalf of all shareholders of a company could effectively supplement direct government regulation of securities markets and other similar markets. The second development was the rise of the civil rights movement, environmentalism and consumerism. The groups behind these movements, as well as many others in the 1960s, 1970s and 1980s, all turned to class actions as a means for achieving their goals. For example, a 1978 environmental law treatise reprinted the entire text of Rule 23 and mentioned "class actions" 14 times in its index.
Businesses targeted by class actions for inflicting massive aggregate harm have sought ways to avoid class actions altogether. In the 1990s, the US Supreme Court issued several decisions that strengthened the "federal policy favoring arbitration". In response, lawyers have added provisions to consumer contracts of adhesion called "collective action waivers", which prohibit those signing the contracts from bringing class-action suits. In 2011, the US Supreme Court ruled in a 5–4 decision in AT&T Mobility v. Concepcion that the Federal Arbitration Act of 1925 preempts state laws that prohibit contracts from disallowing class-action lawsuits, which will make it more difficult for consumers to file class-action lawsuits. The dissent pointed to a saving clause in the federal act which allowed states to determine how a contract or its clauses may be revoked.
In two major 21st-century cases, the Supreme Court ruled 5–4 against certification of class actions due to differences in each individual members' circumstances: first in Wal-Mart v. Dukes and later in Comcast Corp. v. Behrend.
Companies may insert the phrase "may elect to resolve any claim by individual arbitration" into their consumer and employment contracts to use arbitration and prevent class-action lawsuits.
Rejecting arguments that they violated employees' rights to collective bargaining, and that modestly-valued consumer claims would be more efficiently litigated within the parameters of one lawsuit, the Supreme Court, in Epic Systems Corp. v. Lewis, enabled the use of class action waivers. Citing its deference to freedom to contract principles, the Epic Systems opinion opened the door dramatically to the use of these waivers as a condition of employment, consumer purchases and the like. Some commentators in opposition to the ruling see it as a "death knell" to many employment and consumer class actions, and have increasingly pushed for legislation to circumvent it in hopes of reviving otherwise-underrepresented parties' ability to litigate on a group basis. Supporters of the high court's ruling argue its holding is consistent with private contract principles. Many of those supporters had long-since argued that class action procedures were generally inconsistent with due process mandates and unnecessarily promoted litigation of otherwise small claims—thus heralding the ruling's anti-litigation effect.
In 2017, the US Supreme Court issued its opinion in Bristol-Myers Squibb Co. v. Superior Court, holding that over five hundred plaintiffs from other states could not bring a consolidated mass action against the pharmaceutical giant in the State of California. This opinion may arguably render nationwide mass action and class action impossible in any single state besides the defendant's home state.
In 2020, the 11th Circuit Court of Appeals ruled that incentive awards are impermissible. Incentive awards are a relatively modest payment made to class representatives as part of a class settlement. The ruling was a response to an objector who claimed Rule 23 required that the fee petition be filed before the time frame for class member objections to be filed; and payments to the class representative violates doctrine from two US Supreme Court cases from the 1800s.