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Bending of Class Action Rule Threatens Core Notions of Democracy

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March 5, 2009 | by Pat Vaughan Tremmel
CHICAGO --- The modern class action, many argue, is the most important legal creation of the 20th century.

Think of the Agent Orange, tobacco and asbestos class lawsuits -- of how dramatically class action has altered the ways corporate behavior is policed and harmed individuals are compensated.

But despite its merits, the class action today is routinely being pushed beyond its legal confines in ways that threaten core notions of American democracy and constitutionalism, according to Martin Redish, the Louis and Harriet Ancel Professor of Law and Public Policy at Northwestern University School of Law.

Redish, a specialist in civil procedure and constitutional law, lays out his argument in his new book "Wholesale Justice: Constitutional Democracy and the Problem of the Class Action Lawsuit" (Stanford University Press, 2009).

Redish focuses on a procedural rule that, he argues, has taken on a life beyond its context as a Federal Rule of Procedure.

Rule 23, the book argues, has in essence been turned into a Frankenstein monster that is used to police corporate behavior without necessarily compensating those who have been harmed -- while richly rewarding plaintiffs' lawyers.

When viewed in its legal context, the class action is simply one method for aggregating claims provided for in the Federal Rules of Civil Procedure, promulgated by the U.S. Supreme Court to control the processes of the federal court.

"But since the second half of the 20th century, the rule has been used, in essence, as a free-roaming vehicle to police corporations," Redish says.

In blatant conflict with the dictates of our constitutional democracy, he says, many courts, scholars and practitioners view Rule 23 as a license for attorneys to act as bounty hunters who are rewarded for ferreting out illegal behavior.

Lawyers often use Rule 23 to set up situations in which mostly lawyers get compensated, he says. "In some cases it is extremely difficult to identify who the plaintiffs are, and the amounts at stake for individual plaintiffs are often insufficiently small even to rationally justify the effort to file claims."

Redish readily concedes that Rule 23 is an important device for achieving procedural justice. "There are situations in which seriously injured people voluntarily choose to join together and be represented by a limited number of parties. Class action can reduce costs and save time so that the parties don't have to re-litigate the same issues about liability."

But, he stresses, the act of Congress that authorizes creation of the rules specifically says the rules cannot abridge, enlarge or modify substantive rights. Class actions are based on claims vested in the individual, provided for in existing substantive laws -- in antitrust, securities, environmental and consumer protection laws. "Rule 23 was designed to allow individual law suits -- based on rights of individuals -- to be aggregated under certain circumstances."

Instead, he said, many class action lawsuits are the equivalent of a cardboard cutout, such as the ubiquitous cutouts of President Obama that individuals pose next to for photographs. "In all too many cases, the class action merely pretends to be an action aggregating individual plaintiffs," Redish says.

In other areas, such as product liability, victims who have suffered a great deal are sometimes effectively forced into a class action. They lose their autonomy as to how they want to litigate when rights given to individuals are turned into group rights. As a matter of procedural due process, Redish argues, coercive collectivization of individually held rights through use of the class action mechanism should be allowed only in the presence of a truly compelling interest.

The modern class action, in a variety of situations, "has steamrolled past the constitutional limit on the nature of adjudication, on the constitutional rights of individual claimants and past the basic democratic notion of transparent law-making," the book concludes.

"If somebody proposed a law to Congress authorizing payment of money to plaintiffs' lawyers to ferret out corporate misdeeds without requiring that injured victims be compensated, one certainly couldn't be sure the law would pass," Redish says.

"Under the smoke screen of procedure, the DNA of the underlying substantive law is being changed," he says. Victims often are not compensated because they can't be found, and sometimes money is given, through charities, to people who weren't injured.

"This clearly is not part of the constitutionally mandated adversary system," Redish argues. "It's almost like taking a fine from the companies to give them to charity, even though the underlying law authorizes only payment of damages to victims." Such actions threaten core notions of liberal democracy, he says, and clearly should be debated and decided by the electorate.

The modern class action, the book concludes, contravenes basic dictates of legislative transparency and electoral accountability essential to the operation of a successful democratic system.
Topics: Research