Academic journal article Harvard Journal of Law & Public Policy

Prospective Injunctive Relief and Class Settlements

Academic journal article Harvard Journal of Law & Public Policy

Prospective Injunctive Relief and Class Settlements

Article excerpt

INTRODUCTION I.   THE PROBLEMATIC AND PERVERSE INCENTIVES OF      CLASS ACTION SETTLEMENTS II.  COURTS HAVE NO EXPERTISE IN EVALUATING      REGULATORY-STYLE INIUNCTIVE REMEDIES      A. The Consent Decree as Historical         Foundation      B. Regulation through Civil Litigation      C. Hot fuel Litigation      D. Pearson v. NBTY      E. American Express Merchant Litigation III. PROSPECTIVE INJUNCTIVE REMEDIES MAKE BAD      LAW AS WELL AS BAD POLICY      A. Improper Regulatory Preemption of Future         Claims      B. Violation of Counsel's Fiduciary Duty to         Absent Class Members      C. Potential Violations of Rule 23(a)(4)      D. Standing Problems IV.  COUNTERARGUMENTS CONCLUSION 

INTRODUCTION

In 2012 the District of Kansas approved the settlement of a class action against Costco brought on behalf of its gasoline customers. (1) Gasoline, like most liquids, is sold by volume, rather than weight. And, like most liquids, gasoline is subject to the laws of physics that dictate that it will expand as the temperature increases if pressure is held constant. (2) Plaintiffs sued dozens of retailers for failing to disclose this effect of increasing temperatures on the number of gasoline molecules present in a gallon of gas. (3) Under the plaintiffs' theory, because motor fuel expands when heated, "[a] consumer who buys a gallon of fuel at a warmer temperature unknowingly receives less fuel (fewer molecules and less mass) than a consumer who purchases a gallon of that same fuel at a cooler temperature." (4)

As part of the settlement--which paid zero dollars to the millions of absent class members, while the plaintiffs' attorneys filed a still-pending fee request for $10 million--Costco agreed to convert its motor fuel dispensers in states where it purchases fuel on a temperature-adjusted basis to "automatic temperature compensation" (ATC) dispensers and to install ATC dispensers at any new retail stations it opens. (5) The upshot of this development is that customers who purchase gasoline at higher temperatures now have a better deal than they used to and those who purchase it at lower temperatures a worse deal. It should be clear that for many repeat customers over time this is likely a wash, except insofar as all consumers must now absorb, through increased prices, the costs of the new pumps. (6)

At first blush, Costco's expensive conversion of its fuel equipment appears to be a typical instance of the now well-established phenomenon of social policymaking through class action litigation. Scholars of mass torts have spent the better part of the last half-century debating whether the class action suit enabled by Rule 23 of the Federal Rules of Civil Procedure should be considered a device for "the private litigant who is motivated in his attempt to serve the public interest primarily, if not exclusively, by idealistic or communitarian concerns," (7) the case of "a rent-seeking entrepreneur pursuing her own interests with little oversight by her principals," (8) or some combination of the two. (9) Despite the controversy and criticism, however, the class action is alive and well. And specifically the injunctive remedy--requiring, as consideration for class members' release of claims in lieu of or in addition to cash, the defendant to change some aspect of its business practice--has become a common feature of class action settlements. (10) Yet the Costco settlement presents a taxonomicallv distinct remedial category of injunction that has, as of vet, not generally been considered by courts and scholars as such: the prospective injunctive remedy--that is, the injunction that functions solely with respect to future transactions between the defendant and its customers, be they class members or not. This Article will demonstrate how the prospective injunctive remedy operates and argue that, in light of the unique policy and legal problems it creates, judges should rarely approve private-party class action settlements containing one. …

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