Vanderbilt University Law School
For Conference Discussion Purposes Only The concept of adequate representation lies at the core of the contemporary debate over class actions. Commentators accurately describe adequate representation as a "loyalty" right within the familiar taxonomy of "exit," "voice," and "loyalty" rights that individuals might have within a larger, collective organization - a government, a corporation or, here, a non-contractual mechanism for litigation on a mass basis.1 Rule 23 of the Federal Rules of Civil Procedure enshrines the concept of adequate representation as a necessary condition for class certification.2 The reference in Rule 23 to the concept of adequate representation is hardly a doctrinal innovation; rather, the reference replicates in the text of Rule 23 a requirement of constitutional due process previously recognized by the Supreme Court in its 1940 decision in Hansberry v. Lee.3
For all the agreement on the centrality of adequate representation to the legitimacy of the modern class action, however, there remains remarkably little agreement on the content of the concept or how to enforce it. Canvassing the case law, several commentators candidly state that "courts have never unequivocally committed themselves to a set of ex-ante procedures that will assure ex-post that the judgment will bind the members of the class in the same way as if the class members had been individually made parties."4 This disagreement has significant consequences that threaten to undermine the class action device in practical terms as a vehicle for the resolution of claims arising from alleged civil wrongdoing on a mass scale. In Hansberry, the Court firmly established that an absent class member cannot be bound, as a matter of constitutional due process, to a class judgment as to which that member was not adequately represented.5 The holding of Hansberry thus endows absent class members with the ability to escape the preclusive effect of a class judgment if they can demonstrate a lack of adequate class representation - specifically, if they can do so at a time subsequent to entry of the that judgment. Lack of loyalty, in short, enables defection from the class at a later time.
Yet, autonomy for class members in the sense recognized by Hansberry does not come for free. Rather, it comes at the cost of endangering the prospects for a binding peace in the litigation, one that holds the potential for joint gains by both the plaintiff class and the defendant.6 Though Rule 23 and its state-law equivalents nominally stand as vehicles for actual adversarial litigation, what class actions characteristically produce consists of settlement agreements7 - often elaborate descriptions of some new set of legal rights to be substituted, through the operation of the class judgment, for those that class members previously had vis-à-vis the defendant. Transactions, not trials, are overwhelmingly the endgame of class lawsuits.8 And finality is what the settling defendant seeks to purchase from class counsel as the ostensible bargaining agents for absent class members in those transactions.
It comes as little surprise that the lack of agreement over the content of adequate class representation should manifest itself most dramatically in recent years in the ongoing debate over when absent class members may attack collaterally a class judgment and, in so doing, escape the transaction crafted by class counsel. The Supreme Court, if anything, has contributed to the uncertainty in this area with its little-noticed 2002 decision in Devlin v. Scardelletti, in which the Court held that absent class members are "parties" to a class action, at least for the purpose of their ability thereafter to appeal the trial court's approval of a class settlement without first intervening in the litigation.9 The according of party status to absent class members by the Devlin Court - if only, there, for purposes of a largely technical question of appellate procedure10 - simply highlights the broader question of how ordinary preclusion principles should apply to absent class members. The Court appears poised to add further to this debate in rendering decision later this Term in Dow Chemical Co. v. Stephenson,11 in which individual class members challenge the binding effect of the famous 1984 class settlement in the Agent Orange litigation.
In my conference presentation, I shall advance a descriptive claim concerning the content of adequate class representation that leads, in turn, to a series of normative claims. The descriptive claim is that much of the confusion surrounding the content of adequate class representation stems from a failure of both courts and commentators to differentiate clearly three dimensions of that concept. To borrow an image from fable, it is as if blindfolded observers each are grasping different portions of an elephant and then calling out confidently to one another their conclusions about the nature of the entire beast. I propose to remove the blindfolds, step back, and detail the whole elephant - to drag it out into the light of day in order that I may situate and evaluate critically its various parts.
The concept of adequate representation - at least, as embodied in the current law of class actions - encompasses:
I do not mean to suggest that all three dimensions of adequate representation are salient as to all class judgments. Some may raise questions concerning the adequacy of class representation that sound in only certain dimensions of the broader concept. Some may arise in procedural contexts that blur together different dimensions.12 My point nonetheless remains: Only by disentangling the different dimensions of adequate representation can the law hope to draw sound conclusions about the procedural requisites for a binding class judgment.13
The normative implications that I draw from my descriptive account of class representation remain tentative and subject to revision. What the Court ultimately says in Dow Chemical undoubtedly will affect the discussion. But, at this early stage of the project, I draw several normative implications. First, the distinction between the constitutive and the transactional dimensions of class representation tracks a similar distinction in administrative law: that between the question of whether an administrative agency has authority to issue rules on a given subject and the question of whether the agency has exercised arbitrarily its delegated authority. The similarity to administrative law actually comes as little surprise, given that class settlements - what class action lawsuits characteristically produce - amount to a kind of privatized rulemaking. The important normative point, I contend, is that the law should understand the concept of adequate class representation as presenting a similar challenge of how to discipline a potentially problematic delegation.14
This conception has resonance in the history of the class action device itself, which traces its roots to equity proceedings in which preexisting entities with some manner of governing authority over their members - a medieval town, a nineteenth-century fraternal organization, and such - sought to bind those members collectively through litigation on their behalf.15 An administrative law perspective pinpoints that class counsel in the modern world aspire to an ad hoc, one-shot authority to govern as to class members' rights. And such a perspective supplies a relatively well-defined procedural touchstone for the legitimating of that authority. This is not to say that a sound conception of due process in class representation may borrow blindly from administrative law, only that the question of how to legitimate the governing authority of the class action device is one capable of being answered not by open-ended due process balancing16 but by reference to a coherent category of established practice.
Second, contrary to the suggestions of some leading commentators, 17 the jurisdictional dimension of class representation - arising from ill-chosen language in the Supreme Court's opinion in Phillips Petroleum Co. v. Shutts18 - adds no independent normative content to the constitutive and transactional dimensions of adequate representation and, as such, affords no distinctive guidance on the question of what ought to legitimate and make binding a class judgment.
Third, collateral attacks upon class judgments stand as a circuitous and ultimately short-sighted means by which to discipline the delegation of power that class counsel receive by operation of procedural rule. Much of the existing literature on collateral attacks in this context understandably consists of a purely pragmatic debate over how much or how little finality the law ought to accord to class judgments. I offer a different perspective, grounded in an account of Rule 23 as a regulatory regime for legal representation and, hence, as amenable to learning from administrative law.
As administrative law has come to recognize in recent decades, regulation and markets are not inevitably in conflict with one another. Rather, regulation can facilitate the development and healthy functioning of markets. One implication from this regulatory account of class representation, I contend, is that the law of class actions should regard the class settlement process itself as a form of privatized rulemaking, with concomitant demands upon the rulemaking agents - like a conventional rulemaking agency in the public realm - to articulate the basis for the delegation of bargaining power that they seek to wield and to set forth a reasoned explanation for any bargain ultimately struck. As such, I seek to build upon earlier work that conceptualizes class actions generally as an institutional rival to conventional vehicles for law reform and class settlements specifically as privatized rulemaking.19
The central innovation offered here is to think about legitimating class judgments through the facilitation of a market for representation of class members and, in so doing, overcoming the major obstacle to a full-fledged administrative conception of class settlements: namely, the comparative lack of adversarial presentation and of disinterested judicial posture akin to that in administrative law cases involving public regulation. In administrative law, cases characteristically arise from a heated dispute between the regulatory agency and some regulated entity or regulatory beneficiary. And getting the decision right, not just getting the case off the docket, is in the interest of the reviewing court.
The challenge for the law of class action lies in recasting class judgments in terms of competition between would-be agents for the class. Here, right regulation can facilitate competitive markets. To do so, courts presumptively should remove class counsel upon rejection of a proposed class settlement as unfair and replace that firm with the competitor that has succeeded in demonstrating the inadequacy in the class representation. Such a presumptive removal and replacement would encourage the development of a market for class representation that, in turn, would have the far-from-incidental benefit of improving the information provided to courts regarding settlement agreements. This approach would dovetail with a vision of the class settlement process itself as a rulemaking proceeding. A demand that class counsel and their settling defense counterparts generate the equivalent of a Notice of Proposed Rulemaking (NPRM) would require them to articulate a reasoned explanation for the choices made in the settlement agreement as well as the relevant alternatives foregone. Even more importantly, a class settlement NPRM would provide the informational base for criticism and, potentially, displacement of class counsel by competing law firms.
In so doing, an administrative conception of adequate class representation would adapt for the class action context a long-familiar check upon arbitrary representation in the ordinary political realm: namely, removal of the representative from office and replacement with someone else. In addition, such an approach would help to nudge courts back toward their traditional role of deciding legal disputes between adversaries - here, competing class counsel - rather than their all-too-frequent role in the class action context of undertaking judicial inquiry on a vaguely inquisitorial basis,20 if any searching inquiry at all.
1See John C. Coffee, Jr., Class Action Accountability: Reconciling Exit, Voice, and Loyalty in Representative Litigation, 100 COLUM. L. REV. 370, 376-77 (2000); Samuel Issacharoff, Governance and Legitimacy in the Law of Class Actions, 1999 S. CT. REV. 337, 366. Both of these commentators build upon the taxonomy of ALBERT O. HIRSCHMAN, EXIT, VOICE, AND LOYALTY: RESPONSES TO DECLINE IN FIRMS, ORGANIZATIONS, AND STATES (1970). Back to Text
2 See FED. R. CIV. P. 23(a)(4) (predicating class certification upon a judicial finding that "the representative parties will fairly and adequately protect the interests of the class"). Back to Text
3 311 U.S. 32, 42-43 (1940). See Issacharoff, supra note 1, at 353 ("There is no reason to believe, either as a matter of rules craftsmanship or case law or policy, that the concept of adequate representation present in the rules is anything other than the level of constitutional protection of absent class members interests necessary to deem their virtual participation in litigation fundamentally fair."). Back to Text
4 Geoffrey C. Hazard, Jr., John L. Gedid & Stephen Sowle, An Historical Analysis of the Binding Effect of Class Suits, 146 U. PA. L. REV. 1849, 1857 (1998). For a similar conclusion, see Patrick Woolley, The Availability of Collateral Attack for Inadequate Representation in Class Suits, 79 TEX. L. REV. 383, 387 (2000) ("[T]he law remains remarkably unsettled with respect to what qualifies as inadequate representation."). Back to Text
5 Hansberry, 311 U.S. at 42-43. Back to Text
6 See Charles Silver & Lynn Baker, I Cut, You Choose: The Role of Plaintiffs' Counsel in Allocating Settlement Proceeds, 84 VA. L. REV. 1465, 1507 (1998) ("[I]n class actions, as in consensual group lawsuits, conflicts usually arise in connection with opportunities to realize joint gains."). Back to Text
7 See Thomas E. Willging et al., An Empirical Analysis of Rule 23 to Address the Rulemaking Challenges, 71 N.Y.U. L. REV. 74, 143 (1996) (noting the prevalence of settlements in class actions not otherwise resolved by dispositive pre-trial motion). Back to Text
8 See William B. Rubenstein, A Transactional Model of Adjudication, 89 GEO. L.J. 371, 419 (2001). Back to Text
9 122 S. Ct. 2005, 2011 (2002) ("[N]onnamed class members are parties to the proceedings in the sense of being bound by the settlement."). Back to Text
10 The Court cautioned that "[n]onnamed class members . . . may be parties for some purposes and not for others." Id. at 2010. Which purposes are which remains to be seen. Back to Text
11 No. 02-271 (argued Feb. 26, 2003). Back to Text
12 Simultaneous demands for certification of the proposed class and for approval of a proposed settlement - the procedural context of both Amchem Prod., Inc. v. Windsor, 521 U.S. 591 (1997), and Ortiz v. Fibreboard Corp. , 527 U.S. 815 (1999) - have the potential to blur the constitutive and the transactional dimensions of the class judgment. In Amchem, however, the Court emphasized that a desirable class settlement does not in itself make for a certifiable class, see 521 U.S. at 622 - an observation consonant with my separation of the first two dimensions here. Back to Text
13 For reasons that will become apparent momentarily, the foregoing list consciously presents the three dimensions of adequate class representation in a sequence different from what one, at first glance, might see as their natural temporal order - specifically, by treating last the jurisdictional dimension, even though one might regard it as antecedent to the other two. Judicial opinions, of course, situate questions of jurisdiction before analysis of the merits. There is a method to the sequence here, however. Only by first discussing the constitutive and the transactional dimensions of class representation can one reveal that the third, jurisdictional dimension has no independent significance - one of my normative claims below. Back to Text
14 In casting the enterprise in terms of disciplining delegation, I borrow from rhetoric in the administrative law literature. See Lisa Schultz Bressman, Disciplining Delegation After Whitman v. American Trucking Ass'ns, 87 CORNELL L. REV. 101 (2002). Back to Text
15 The leading history of the class action captures this lineage in its title. See STEPHEN C. YEAZELL, FROM MEDIEVAL GROUP LITIGATION TO THE MODERN CLASS ACTION (1987). Back to Text
16 See supra note __ and accompanying text (rejecting due process analysis grounded simply in ad hoc balancing akin to that in the familiar administrative law case of Mathews v. Eldridge, 424 U.S. 319 (1976)). Back to Text
17 See Henry Paul Monaghan, Antisuit Injunctions and Preclusion Against Absent Nonresident Class Members, 98 COLUM. L. REV. 1148 (1998); Woolley, supra note 4. Back to Text
18 472 U.S. 797, 812 (1985) (stating that "the named plaintiff at all times must adequately represent the interests of the absent class members"; emphasis added). Back to Text
19 I touch upon these two respective themes in earlier articles. See Richard A. Nagareda, The Preexistence Principle and the Structure of the Class Action, 103 COLUM. L. REV. 149, 152-53 (2003) [hereinafter Nagareda, Preexistence Principle] (conceiving class actions as institutional rivals to civil justice reform legislation as a way to analyze the structural distinction in class action law between mandatory and opt-out classes); Richard A. Nagareda, Turning from Tort to Administration, 94 MICH. L. REV. 899, 976-81 (1996) [hereinafter Nagareda, Tort to Administration] (discussing mass tort class settlements in terms of negotiated rulemaking by public administrative agencies).
The present article extends the analysis to the debate over the content of adequate class representation and the related phenomenon of collateral attacks. My contributions on these subjects add to the pathbreaking work of a new generation of procedural scholars on the nexus of class actions and concepts that sound in administration. In particular, see Jonathan T. Molot, An Old Judicial Rule for a New Litigation Era, 113 YALE L.J. (forthcoming Oct. 2003), available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=394100. See also Howard M. Erichson, Mass Tort Litigation and Inquisitorial Justice, 87 GEO. L.J. 1983 (1999) (discussing the judicial tendency toward inquisitorial proceedings in mass tort class actions); Rubenstein, supra note 8 (conceptualizing class actions generally as transactions). This recent body of work itself builds upon an earlier account of "managerial judges" in civil litigation generally. See Judith Resnik, Managerial Judges, 96 HARV. L. REV. 374 (1982). Back to Text
20 For a thoughtful account of how courts in civil litigation generally and mass tort class actions especially have diverged from Lon Fuller's familiar forms and limits of adjudication, see Molot, supra note 19. Cf. Lon Fuller, The Forms and Limits of Adjudication, 92 HARV. L. REV. 353 (1978). On the connection between the judicial posture in class actions and the kinds of inquisitorial proceedings familiar to the civil process in continental Europe, see Erichson, supra note 19. Back to Text
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