Class Action Democracy

Abstract

A persistent concern with class actions is that the attorney will take advantage of the class members, conducting the litigation in a way that lines their own pockets at the class members’ expense. Holding an agent like an attorney accountable is always a problem, but it is especially dire in class actions because the class cannot meaningfully participate in the litigation. If the attorney misbehaves, class members cannot, for example, vote to replace them. This lack of effective democratic procedures in class actions rationalizes a range of doctrines and proposals that restrict them. Given this democratic deficit it makes sense to treat class actions as something of a last resort. I question this democratic critique of class actions. Despite the intuitive appeal and legal importance of democratic procedures, they would actually do little to benefit class members. Drawing on the economics of communication I show that there is a fundamental trade-off between democratic control and expertise. Taking this trade-off into account, even idealized democratic procedures would not make class members better off: if class members could vote to replace their attorney they would generally prefer not doing so, instead delegating matters to their attorney. These observations defang the democratic critique of class actions, therefore removing the most promising justification for restricting them and treating them as a disfavored procedure. That being said, courts should carefully scrutinize settlement and fee arrangements to make certain that the interests of the attorney and the class remain roughly, albeit imperfectly, aligned.