De Facto Class Actions

Abstract

A persistent criticism of class actions is that they have unresolvable governance problems. The worry is that in a class action the attorneys will be able to take advantage of the class members, conducting the litigation in a way that lines their own pockets at the class’ expense. The relevant question should rather be how class actions fare compared to potential alternatives. As a common feature of collective action, governance problems are ubiquitous. However, we can determine how worrisome the governance problems with class actions are through comparison with similar types of actions. Cases brought by states and corporations can also be forms of aggregate litigation, and courts have consistently expanded the opportunities for these kinds of litigation while restricting class actions. From this comparative perspective class action governance appears to be especially fraught. Class actions lack the democratic processes of both corporate and state governance: unlike shareholders or citizens class members cannot vote to replace their attorney or otherwise steer the litigation. Their options are limited. But, despite both the intuitive appeal and doctrinal importance of democratic procedures like voting, democratic procedures actually do little to improve litigation governance. Class action governance functions better than it seems to at first because of the importance of the attorney’s legal expertise. Therefore, the governance problems in class actions are not substantially more dire than those confronting other types of aggregate litigation, especially if some modest procedural changes are implemented. Put in the proper context, then, the governance problems in class actions have been overstated.