The Malleability of Collective Litigation

TLDR: In this paper, the authors propose an array of mechanisms to strengthen collective litigation procedures, including shifting the burden to defendants to justify the business action that prevented collective litigation, and taxing defendants for making the plaintiffs' case weaker.

Abstract: In Wal-Mart v. Dukes, (1) Wal-Mart avoided class action because employment decisions were made by local supervisors. However, it was Wal-Mart who chose to delegate discretion; by doing so, it made class litigation less likely. Wal-Mart's choice of business administration, then, substantially reduces its expected liability. This is but one example of a broader, overlooked phenomenon. Mass defendants can control, before the occurrence of damages, the scope of future collective litigation. Collective litigation procedures are malleable, sensitive to the defendant's pre-damages choice of actions. This Article develops and substantiates this insight. This Article elaborates on two manifestations of this phenomenon. First, defendants can avoid class actions by "individualizing" the prospective class, injecting individual differences that preclude class treatment. Second, defendants can selectively contract with future victims, buying out the stronger, leaving only weak victims with a claimable right, and reducing the prospective class's capacity to litigate. Against this backdrop, this Article proposes an array of mechanisms to strengthen collective litigation procedures, including shifting the burden to defendants to justify the business action that prevented collective litigation, and taxing defendants for making the plaintiffs' case weaker. TABLE OF CONTENTS INTRODUCTION I. THE CONVENTIONAL STORY AND THE ROLE OF COLLECTIVE LITIGATION A. Mass Defendants' Inherent Litigation Advantages 1. Unequal Economies of Scale 2. Selective Settlements--"Cherry-Picking" Plaintiffs. B. Defendants' Litigation Advantages as a Social Problem C. The Solution: Collective Litigation II. DOCTRINE-BASED MALLEABILITY--"INDIVIDUALIZING" THE CLASS A. The Crucial Class Certification Standards 1. Overview 2. Individual versus Common Questions B. Inducing Factual Differences--"Individualizing" the Class 1. Individualizing Written Contracts 2. Creating Choice of Law Differences 3. Varying Oral Communication 4. Heterogeneous Plaintiffs and Products 5. Decentralizing Action III. SELECTIVE PRE-DAMAGES CONTRACTS A. Ex ante Divide-and-Conquer B. Examples 1. Nuisances 2. Products Liability: Disclaimers and Standard-Form Contracts IV. NORMATIVE IMPLICATIONS A. Litigatory Damages B. Judicial Discretion 1. Certifying Individualized Classes 2. Suspicion toward Waivers and the Contemporary Law C. Class-Wide Solutions 1. Individualizing Course of Action 2. Selective Pre-Damages Contracts CONCLUDING REMARKS. INTRODUCTION During the 2011 term the Supreme Court ruled on the largest civil rights class action suit in U.S. history. (2) In "one of the most expansive class actions ever," (3) hundreds of thousands of women claimed that Wal-Mart--the world's largest private employer (4)--discriminated against them on pay and promotions in "literally millions of employment decisions." (5) However, the main issue before the Justices was not substantive, but procedural. Courts do not automatically authorize class litigation; they first have to certify a lawsuit as a class action. The Wal-Mart certification debate centered on the following question: whether these scores of women "have enough in common to join together in a single lawsuit." (6) As Wal-Mart conferred pay and promotion discretion on its local managers, the plaintiffs' claims might be too individualized to be pursued collectively. While Wal-Mart argued that plaintiffs "do not have enough in common to warrant class-action treatment," the plaintiffs, naturally, stressed the centralized, company-wide policy behind pay and promotion decisions. (7) These are the rules of the game. This Article moves beyond the Wal-Mart case, which was decided against the plaintiffs, (8) to examine the rules of the game more closely. …