Class Action Dilemmas: Pursuing Public Goals for Private Gain

For all our effort, we do not know whether this is a good or a bad thing. The great big question is whether the social utility of the large class action outweighs the limited benefits to individuals, the aroma of gross profiteering, and the transactional costs to the court system.

John Frank, 1966 Civil Rules Advisory Committee Member,
in a memorandum to the Chair of the 1995 Committee ¹

When we peered into the class action fishbowl, we found a murky picture of Rule 23 (b) (3) damage class actions. In the ten class actions we studied closely, plaintiff attorneys seemed sometimes to be driven by financial incentives, sometimes by the desire to right perceived wrongs, and sometimes by both. They sometimes devoted substantial resources to investigating case facts and law, but at other times moved quickly to negotiating settlements. Some of these settlements served class members' interests better than others. Most produced substantial fees for the lawyers themselves. Judges sometimes used their authority to ensure that settlements provided more for class members and the public than for the lawyers, but at other times seemed reluctant to do so. Objectors sometimes contributed to improving the quality of settlements, but at other times they appeared on the scene seemingly only to collect fees for themselves. Is there any way to sort out this mix of practices and outcomes to answer the "great big question" about damage class actions: Do they, on balance, serve the public well?

From ten case studies, we cannot extrapolate to the universe of damage class actions, or even to all consumer class actions or all mass tort class actions. To determine whether, on balance, Rule 23(b)(3) damage class actions do more good than harm we would need to survey a large, statistically representative sample of class actions and reliably measure their outcomes. Such a study would require a list of the universe of damage class actions and detailed information about their direct and indirect consequences, neither of which is easy to obtain at present. But even if we could conduct that study, there is no guarantee that we could agree on how to interpret the results. Without a consensus on what the social utility of damage class actions should be, there can be no

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