The Conundrum of Competing Class Actions and the Efficiency Question

Abstract

There is an increasing phenomenon of competing class actions – class actions purporting to cover the same or nearly the same common issues of alleged wrongdoing but brought by different representative parties (or “lead applicants”) with different lawyers and often different litigation funders. A decision by a court allowing one class action to proceed (with, presumably, one set of lawyers acting) while staying all others is significant and raises a number of matters that deserve consideration. Court and economic efficiency are key among these though they can point to two answers. Efficiency can be produced by economies of scale and lack of duplication (favoring one proceeding) but also by rivalrous competition (favoring more than one proceeding). If litigation has attributes of 'natural monopoly' then efficient franchise bidding through the former may be the preferred solution for trying the common issues stage, though not necessarily the second stage of trying individual issues.