Revolution v. Evolution in Class Action Reform

NORTH CAROLINA LAW REVIEW Volume 96 Number 3 23rd Annual Institute for Law & Economic Policy Symposium: Secrecy Article 9 3-1-2018 Revolution v. Evolution in Class Action Reform Richard Marcus Follow this and additional works at: http://scholarship.law.unc.edu/nclr Part of the Law Commons Recommended Citation Richard Marcus, Revolution v. Evolution in Class Action Reform, 96 N.C. L. Rev. 903 (2018). Available at: http://scholarship.law.unc.edu/nclr/vol96/iss3/9 This Article is brought to you for free and open access by Carolina Law Scholarship Repository. It has been accepted for inclusion in North Carolina Law Review by an authorized editor of Carolina Law Scholarship Repository. For more information, please contact . 96 N.C. L. REV. 903 (2018) REVOLUTION V. EVOLUTION IN CLASS ACTION REFORM* RICHARD MARCUS** It is widely agreed that the federal-court class action became a somewhat revolutionary device after Rule 23 was amended in 1966. Since 1966, further substantial changes to the rule have been considered by the rulemakers, but more proposals have been discarded than adopted. Meanwhile, a major battle has emerged about whether class actions should primarily or solely be designed to achieve deterrence or limited to a compensatory function. That division has been central to many current debates, such as the issue of “no injury” class actions, whether courts could certify classes only after determining that they were “ascertainable” by an identified administratively feasible method, and whether the idea of cy pres could be used to justify class actions in which the defendant paid a large amount, but the class members themselves received little or nothing and the funds were instead used for good works of some relevant sort. Changes to Rule 23 in the last half century have not directly addressed these hot-button issues. But judicial decisions— including some by the Supreme Court—have tackled some of these issues, and Congress has adopted legislation to address some alleged class action abuses, such as “coupon settlements.” * © 2018 Richard Marcus. ** Coil Chair in Litigation, University of California, Hastings College of the Law. I am indebted to Steve Burbank, Scott Dodson, and Mary Kay Kane for comments on a draft. I did not accept all their suggestions. Since 1996, I have served as Associate Reporter of the Advisory Committee on Civil Rules. In that role, I was present for the end of the first episode of class action rule reform in 1996–1998, and directly involved in the second and third episodes. To a substantial extent, I draw on those experiences in this Article. As a consequence, it is a travelogue of the reform trail. But I am speaking only for myself, not for the Advisory Committee or anyone else. At several points in this Article, I do rely on official documents of the rulemaking process such as agenda books for meetings of rules committees. These materials are publicly accessible on the website of the Administrative Office of the U.S. Courts: www.uscourts.gov. In addition, on occasion I report on events in which I was involved, and I do sometimes do not cite to those official documents (some of which I authored) because I am reporting on events in which I was personally involved. 96 N.C. L. REV. 903 (2018) 904 NORTH CAROLINA LAW REVIEW [Vol. 96 This Article explores the last half century of class action reform in terms of whether further “revolutionary” changes will occur in federal class action practice. It finds that although the rulemakers looked at some aggressive changes in the 1990s, those amendment ideas were eventually jettisoned, and the changes actually adopted have been evolutionary rather than revolutionary. That trend continues with the most recent amendment package, which may go into effect on December 1, 2018; the rulemakers are not embracing dramatic changes to the rule. Meanwhile, the possible sources of “revolutionary” change lie elsewhere. Some worry that the Supreme Court will deliver shocks to class action practice by deciding cases, though in recent terms it has not proved to be as adventurous as some thought it might. Congress has pending before it legislation that seemingly would make a fairly “revolutionary” commitment to limiting class actions to the compensatory purpose, and disavowing the deterrence purpose endorsed by many. The fate of that proposed legislation is uncertain as of this writing. Though action by Congress or decisions by the Supreme Court might produce “revolutionary” change for class actions, this Article suggests that technology may instead be the most important source of major change. In the wired world of the twenty-first century, the “headless” class action of the past may be replaced by the “wired” class action in which class members have regular contact with one another and class counsel. That could work a genuine revolution. INTRODUCTION ....................................................................................... 905 I. THE TENSION BETWEEN COMPENSATION AND DETERRENCE ............................................................................... 908 II. THE FIRST TWO EPISODES OF RULE 23 REFORM.................... 916 A. 1991–1998 ............................................................................... 917 B. 2000–2003 ............................................................................... 920 III. THE EVOLUTION OF THE 2016 PACKAGE: OUTREACH AND ISSUES DEFERRED .............................................................. 921 A. Cy Pres .................................................................................... 924 B. Ascertainability ...................................................................... 928 C. “No Injury” Classes ............................................................... 930 IV. THE ACTUAL 2016 PACKAGE ..................................................... 933 96 N.C. L. REV. 903 (2018) 2018] CLASS ACTION REFORM 905 V. OTHER POTENTIAL SOURCES OF REVOLUTIONARY CHANGE ........................................................................................ 936 A. The Supreme Court ............................................................... 936 B. Action by Congress ................................................................ 938 C. Technology ............................................................................. 939 CONCLUSION ........................................................................................... 942 INTRODUCTION Legal change is usually evolutionary, though those who do not like a certain change are sometimes prone to term it “radical” or “revolutionary” as a way of emphasizing its importance and generating opposition. But at least some legal changes do turn out to be fairly revolutionary. One such revolutionary change was the 1966 amendment of Rule 23. John Frank, a member of the committee that drafted the 1966 rule, said it was “the most radical act of rulemaking since the Rule 2 ‘one form of acti (...truncated)