Square pegs do not generally fit in round holes. When and if they do, the fit is certainly imperfect. Maureen Carroll calls on this adage to explain how courts and lawmakers are muddling the class action. In Class Action Myopia, Carroll argues that institutional actors’ singular focus on the Rule 23(b)(3) class action—what Carroll calls the aggregated-damages class action—negatively affects other types of class actions. Institutional actors fail to assess how perceived problems in the aggregated-damages context might not even exist in other class actions. Relatedly, actors do not anticipate how proposed solutions distinctively, and sometimes negatively, affect different class actions. This myopia, Carroll argues, must give way to providence.
Carroll begins by rehearsing the different types of class actions addressed by Rule 23: logical-indivisibility (Rule 23(b)(1)(A)), limited fund (Rule 23(b)(1)(B)), injunctive civil-rights (Rule 23(b)(2)), and aggregated-damages class actions (Rule 23(b)(3)). She argues that when Rule 23 was amended in 1966, the first three subtypes were designed to reflect common practice by courts and parties who were using some version of aggregate litigation to respond to specific litigation difficulties. For example, where a defendant wished to take water from a stream, it could not do so and only affect one downstream landowner and not others. But litigating disputes between the defendant and various landowners separately might lead to inconsistent judgments. Rule 23(b)(1)(A) thus provides that a class of potential claimants can combine their claims and seek one consistent judgment. Carroll explains how this same historical pedigree applied to limited-fund and injunctive civil-rights class actions—these subtypes were created to deal with existing complexities facing courts and largely codified best practices that had developed in response. Moreover, these subtypes were meant to address unfair outcomes produced by individual litigation in these specific contexts.
Rule 23(b)(3), Carroll argues, was different. It did not respond to existing concerns and did not use some version of aggregate litigation that courts were already employing. Instead, Rule 23(b)(3) was, as Benjamin Kaplan explained, an “innovation.” It was not put forward to address unfair outcomes, as with the other subtypes; it created a new litigation mechanism. By aggregating small damage awards among many plaintiffs against a common defendant, the Rule 23(b)(3) class action motivated claimants and their lawyers to bring new kinds of cases. Carroll reminds us that the 1966 rulemakers were cautious about when and how Rule 23(b)(3) was to be used. Yet decades later, the aggregated-damages class action is the most common class action; according to some studies, it represents a full two-thirds of the class actions filed.
Perhaps because of the sheer number of aggregated-damages class actions, courts and lawmakers have focused exclusively on perceived problems that arise within that subtype. Carroll argues, however, that the common concerns about, and criticisms of, aggregated-damages class actions do not apply to the other subtypes. The standard critiques—undue settlement pressure, attorney overcompensation, and delay and expense—are simply misplaced when considered in the context of other subtypes. For example, assuming the aggregated-damages class action actually creates undue settlement pressures, it does so because the stakes are raised when a claim morphs from an individual one to a class-based one. But, with logically indivisible relief, for example, the remedy is the same whether sought by one plaintiff or one hundred. This means that settlement pressure does not increase by virtue of the class-action device. Similarly, attorney overcompensation cannot apply to the civil-rights injunction subtype because there is no contingency fee involved where no monetary relief is sought.
Because the problems with class actions are not differentiated based on subtype, the solutions are similarly undifferentiated. For instance, the adoption of Rule 23(f), providing for interlocutory review of class certification decisions, has resulted in fewer class certifications. Yet this decrease applies to all subtypes, meaning that all class-action plaintiffs face a greater difficulty in certifying their proposed classes. Carroll argues that this is a sub-optimal result. For example, the civil-rights injunction class action generally requires a pro-bono attorney or other non-profit to take the case. But changes like Rule 23(f) create higher transaction costs for the case, lessening the likelihood that a lower-resourced individual will be able to find a lawyer willing to take on her civil-rights injunction case. To the extent there is value in these cases, the failure to differentiate in class action reform creates negative consequences. We lose the type of class action that society might value most.
After exploring the other undifferentiated ways in which class action reform has developed, an analysis that looks at changes ranging from class action arbitration waivers to Wal-Mart v. Dukes, Carroll discusses several case studies to demonstrate the impact these changes are having on other subtypes. Focusing on the injunctive civil-rights subtype, an area over which she has great expertise and passion, she shows that applying aggregated-damages solutions (and the consequential chilling of class actions) has thwarted attempts to obtain such class actions. Legitimate pursuit of civil-rights ends are delayed, the system is less efficient, and structural reform becomes much harder to achieve.
Carroll ultimately argues that this myopic focus on aggregated-damages class actions must stop. First, when considering reform, institutional actors must consider whether the problem they are addressing is unique to aggregated-damages class actions or whether it is applicable to all class action subtypes. Second, when denying class action treatment in a particular context, actors must consider whether that is the most effective response to the perceived problem, and if so, whether that change will have negative consequences for other class action subtypes. This may be easiest to achieve if the class action subtypes are divided not just by rule designation but also by the requirements that apply to each. Carroll suggests revising Rule 23 to establish differentiated standards for interlocutory appeal, evidentiary burdens, and ascertainability based on subtype. This is just a beginning, Caroll explains, but it is a beginning that at least takes account of important differences.
Carroll adeptly identifies a problem with class action reform, picking up on work such as Suja Thomas’s argument that atypical cases make for ill-conceived reform by the Court and federal civil rulemakers. Thomas discussed cases such as Wal-Mart and Twombly, as well as discovery reform movements by the federal rulemaking body. Fashioning reform when focused on atypical cases is problematic because the reform either does not fit the typical case or, worse, does harm to the typical case. Carroll’s argument elegantly applies this principle to the class action, except her argument is not that there is a typical class action, but that there are four types of class actions that serve four different purposes. By pointing out that institutional actors have taken a myopic view of class actions, Carroll’s work joins the burgeoning call for differentiation in civil litigation reform. Not all cases, let alone all class actions, are the same. Indeed, a square peg response in a world of both square pegs and round holes will not do.