Search

The legal ethics of class actions is a mess, with many lingering, unresolved questions and conflicting answers. The culprit is a fundamental lack of agreement regarding the identity of the client, without which it is impossible to consistently resolve concerns about conflicts of interest and determine the scope of lawyers’ duties of competence and communication to the class, class representative, and class members. This Essay offers a simple solution to this disagreement: the class lawyer represents the class as an entity, not the class representatives and members, who are constituents of the class client. While conceptually simple, treating the class as the client is but the first step on the road to untangling the legal ethics of class actions. The representation of entity clients requires a well-developed governance structure, complete with authorized constituents who can make decisions and communicate on behalf of the entity. Current class action law does not yet include such a governance structure for class actions. Instead, the class representative and class members are sometimes treated as clients and sometimes as authorized constituents, while class lawyers and courts are called upon to make decisions for the class as if they were its constituents. This Essay outlines a way out of this mess. It argues that we ought to keep things simple by treating the class as the entity client and developing governance structures to allow the class to act via authorized constituents, reducing its reliance on class counsel and judicial supervision. [ABSTRACT FROM AUTHOR]

For decades, courts and commentators have been aware that the potential for conflicting interests among the class representatives, class counsel, and absent class members is inherent in the class action device. Notwithstanding this realization and a substantial amount of scholarly and judicial commentary on class conflicts, one kind of conflict has not received due attention: the conflict that inevitably arises when class counsel also represents class members as individuals. This conflict--so common to be almost invisible--arises from the beginning of a putative class representation and may create a fraught situation for a lawyer concurrently representing both the class (or putative class) and the class representative individually. This Article examines three situations in which these conflicts are most acute: holdouts (where the class representative holds out against a settlement that would benefit the class as a whole), sellouts (where the class representative could benefit personally by settling individual claims only), and payouts (where the class representative could use class action procedures to benefit personally at the expense of the class). Additionally, this Article canvases potential solutions and concludes that radical ones--for instance, banning concurrent representation of a class and a class member individually--would do more harm than good. Therefore, this Article recommends more measured responses, primarily (1) greater disclosure of risks to individual clients by their attorneys; (2) greater judicial oversight; and (3) an amendment to Rule 23 of the Federal Rules of Civil Procedure, or its advisory committee notes, calling on courts to police the types of conflict this Article identifies. [ABSTRACT FROM AUTHOR]

In class action practice, settlements play a central role. As in all litigation, the parties on both sides see settlement as a way to make peace and avoid the risk associated with going to trial. Class settlements, however, ofer defendants something that they cannot obtain by any other means--namely, the ability to cause individuals not in front of the court to release all claims that relate to the events at issue in the class action. Given the preclusive efects a class settlement carries with it, defendants are likely willing to pay some "preclusion premium" to procure a settlement that covers as many claimants and claims as possible. Though class counsel should theoretically accept this preclusion premium and agree to settle only when it represents the best outcome for all class members, present and absent, recent developments indicate that the theory does not match practice. This Note explores the emerging trend of class settlements that include "claimless claimants," individuals who clearly do not possess any viable claim in the settling court. This Note argues that by agreeing to include claimless claimants in settlement classes, class counsel increase their award while shortchanging individuals with viable claims and also sometimes unduly fleecing individuals with no viable U.S. claim out of a possibly more valuable foreign claim. In these class settlements, then, some absent class members likely do not receive the adequate representation mandated by due process and the class action rule. Furthermore, even if courts take steps to remedy this deficiency in representation, these settlements arguably face other, insurmountable legal hurdles. They may violate the Rules Enabling Act, run afoul of the presumption against the extraterritorial application of U.S. law, and fall outside the settling court's subject-matter and personal jurisdiction. [ABSTRACT FROM AUTHOR]

The article examines the modern law of class actions and due process in the U.S. Topics discussed include fundamental principles of due process and how it permeated the civil justice system and the Federal Rules of Civil Procedure, original form and current iteration of Federal Rule of Civil Procedure 23 governing adequate legal representation by a counsel and dismissal or compromise of a class action, as well as Supreme Court decisions interpreting Rule 23 from the perspective of due process.

If a deterrence rationale fuels the engine that is class action litigation, then its principles should inform our efforts to cure the imperfections in class counsel compensation schemes. Class action defendants are deterred from wrongdoing when it becomes economically unwise to act as such. For publicly-traded companies, the economic prudence of their conduct depends on shareholder perception. Class actions are bad news for shareholders of the named defendant public company. In response, the market reacts, a company's share price decreases, and a message is sent to the company about the imprudence of its conduct. A question then arises: should we use the magnitude of a class action '5 impact on stock price as a gauge in measuring the reasonableness of class counsel's fee? In theory, the greater the impact, the worse the market thinks of the defendant company's actions, and the more the company will suffer--thereby deterring it from similar future wrongdoing. Class counsel's efforts in litigating a greater-impact claim merit a more substantial award than those litigating lesser-impact claims. Further, a court could theoretically ferret out non-meritorious claims from worthy claims by looking at their impact on stock price; class counsel bringing bogus claims--a real problem in the world of class actions--warrant little-to-no reward in a deterrence-based framework. However compelling this idea may be in the abstract, does it hold up in our practical world? The answer is not so clear. [ABSTRACT FROM AUTHOR]

This Article proposes requiring a binding voting mechanism for class members to ratify the recipients of a cy pres distribution as a solution to growing concerns surrounding cy pres distributions in class actions. Unlike alternative reforms, which focus on ensuring loyalty from class counsel, this proposal enhances class member voice and exit rights to ensure organizational legitimacy and relies on voting rights to compensate class members. As a result, this proposal is not only rooted well within modern class action doctrine, but also compensates all class members, something other proposed reforms are unable to do. [ABSTRACT FROM AUTHOR]

Class counsel and prosecutors have a lot more in common than scholars realize. These lawyers have clients, but their clients are diffuse and lack a formal decisionmaking structure. Because of the nature of their clients, class counsel and prosecutors have to make decisions for their clients that one would ordinarily expect clients to make--and indeed that legal ethics rules would expressly require clients to make in other contexts--such as decisions concerning objectives of representation or whether to settle or plead guilty. Both complex litigation and criminal law scholars recognize that these lawyers' self-interests diverge from their clients' interests. But the complex litigation and criminal law literatures discuss the ensuing accountability problem solely in their own spheres. This article considers the insights about accountability that complex litigation can learn from criminal law. More specifically, the article argues that although there are real differences between the two systems, these differences do not justify the completely different approaches to accountability that the two contexts employ. Rather, the comparison suggests that internal checks within class counsel's firm, between plaintiffs' firms, or between third-party funders and class counsel can improve accountability, much as internal checks improve accountability within some prosecutors' offices. [ABSTRACT FROM AUTHOR]

Although class actions promise better deterrence at a lower cost, they are infected with problems that can keep them from delivering on this promise. One of these problems occurs when the agents for the class--the class representative and class counsel--advance their own interests at the expense of the class. Controlling agency cost, which often manifests itself at the time of settlement, has been the impetus behind a number of class action reform proposals. This Article develops a proposal that, in conjunction with reforms in fee structure and opt-out rights, controls agency costs at the time of settlement. The idea is to allow the court, once a settlement has been achieved, to put the class's claims up for auction, with the settlement acting as a reserve price. An entity that outbids the settlement becomes owner of the class's claims and may continue to pursue the case against the defendant. A successful auction results in more compensation for the class. On the other hand, if no bids are received, the court has evidence that the settlement was fair. The prospect of a settlement auction also deters class counsel and the defendant from negotiating a sweetheart deal that sells out the class. The Article works through a series of theoretical and practical issues in settlement auctions, including the standards that a court should use to evaluate bids, the limitations on who may bid, and ways to encourage the emergence of an auction market. [ABSTRACT FROM AUTHOR]

The Dukes "rigorous analysis" blurs the line between "certification" and "merits" discovery in class action litigation. Without adequate discovery, class counsel risk finding themselves without a sufficient record to survive appellate review of class certification orders. Class counsel must be aware of how commonality challenges based on the merits of the class allegations can defeat certification. Therefore, class counsel must anticipate merit-based challenges and develop a discovery strategy that will enable a sufficient demonstration to the appellate courts that common issues predominate in the case. After surveying current case law, this article provides class counsel and the judiciary with recommendations regarding requirements for pre-certification discovery. [ABSTRACT FROM AUTHOR]

This Article examines the problem of cy pres relief in class actions through the lens of optimal claim structure and class membership. It finds that the present cy pres doctrine does little to advance the creation of optimal class actions, and that it may do some harm to achieving that goal. The Article then proposes an alternative "nudge" to induce putative class counsel to structure class actions in an optimal way: setting attorneys' fees so that counsel is compensated through a combination of an hourly market rate and a percentage of the net recovery to the class itself. The Article demonstrates that this approach to attorneys' fees aligns the interests of the class in maximizing its recovery, class counsel in obtaining a profitable and reasonable fee, and society in certifying the class action with the greatest expected net benefit. This approach also eliminates many of the agency-cost problems associated with class counsel failing to attend to the interests of the class. Finally, this approach eliminates most of the incentive for class counsel to seek cy pres relief, although in some cases cy pres relief may yet be appropriate. [ABSTRACT FROM AUTHOR]

An essay is presented on the updation of Civil Rule 23, which governs the procedure in class actions in Ohio. Topics discussed include use of the Ohio Rule 23 by the Ohio Supreme Court in different federal counterpart, amendments in the Federal Rule of Civil Procedure 23 with the timing of class certification decision and appointment of class counsel, and class certification decisions by the U.S. Supreme Court in Wal-Mart Stores, Inc. v. Dukes and Comcast Corp. v. Behrend.

The article discusses the setting of attorneys' fees in securities-based class action lawsuits in America as of November 2013, focusing on self-interest among investors and the U.S. Congress' enactment of the nation's private Securities Litigation Reform Act (PSLRA). Mechanisms for selecting lead plaintiffs and class counsel under the PSLRA are mentioned, along with American case law in relation to the submission of fee agreements. Institutional investors and judicial orders are examined.

By mandating that numerous plaintiffs litigate their common question claims separately in individual arbitrations rather than jointly in class action arbitrations, the Supreme Court in AT&T Mobility LLC v. Concepcion entrenched a potent structural and systemic bias in favor of defendants. The bias arises from the parties' divergent stakes in the outcome of the common question litigation in individual arbitrations: each plaintiff will only invest to maximize the value of his or her own claim, but the defendant has an incentive to protect its entire exposure and thus will have a classwide incentive to invest more in contesting common questions. This investment advantage enables the defendant to wield superior litigation power against each plaintiff, skewing the outcome of individual arbitrations in its favor and frequently rendering claims not worth filing. Concepcion perpetuates the bias by precluding the use of a class arbitration solution. We propose that courts neutralize the Concepcion bias by appointing class counsel to represent each plaintiff in individual arbitrations. Without threatening Concepcion's holding that arbitral efficiency precludes class arbitration unless the parties specify otherwise, the class counsel solution equalizes the parties' investment incentives to transform individual arbitrations into a socially useful legal system for promoting the deterrence, compensation, and other public policy objectives of federal and state substantive law. [ABSTRACT FROM AUTHOR]

The article offers suggestion for public defenders on getting relief from excessive case loads. It distinguishes public defenders from other stakeholders in terms of quality and ethics-based approach for accessing effective assistance, and signifies the quantitative approach for measuring effective assistance of counsel provided by the U.S. Supreme Court Strickland Standards. It further states the qualitative ethical assessments and the constraints faced by them.