Preclusion, Due Process, and the Right to Opt Out of Class Actions

Abstract:     
Among the current controversies in class action law is the question of when cases are properly classified as (b)(2) as opposed to (b)(3) class actions. Much rides on the distinction, particularly since the manageability requirement of Rule 23(b)(3) may frustrate the certifiability of claims. Even the classic forms of class actions, such as the employment discrimination disparate impact claim, may be caught up in these debates, as evident from the split between the Fifth Circuit in Allison and the Second Circuit in Robinson.

This Article attempts to redirect the inquiry by focusing on the preclusive effect of class actions. The key focus is on the constitutional implication of the right to opt out, with a focus not so much on the high value cases, such as the mass tort, but on class actions in which the bulk of the class has claims that are unlikely to merit individual prosecution. I want to suggest that the right to opt out may be of considerable significance in this context, although not necessarily because of a meaningful exit strategy from the class. Rather, the right of exit may be thought of as significant not because of the prospect of individual removal from any particular case, but instead, because of its impact on the preclusive effect of class action litigation. The argument proceeds in two parts. First, I want to examine the case law surrounding the right to opt out of a class action as a determinant of the future preclusive effects of a judgment on absent class members. The key case here is the Ninth Circuit's decision in Brown v. Ticor Title Insurance Co. and the key insight is the inability to preclude future individual claims unless class members have been afforded an opportunity to opt out in the initial class action. I then apply the rationale of Ticor to the current dispute over the scope of Rule 23(b)(2) certification in the employment discrimination context. Second, I want to look at the emerging cause of action for medical monitoring to show a direct application of the limitations on the preclusive effects of class actions that do not afford an individual right of exit. The conclusion will then focus on the nature of the class action certification as determining its future preclusive effects on absent class members.

Keywords: class actions, opt out, medical monitoring

JEL Classifications: K4, K1

Accepted Paper Series