Preclusion in Class Action Litigation

Abstract:     
Despite the intense focus that courts and commentators have trained upon class litigation for the last twenty-five years, a central feature of the class-action lawsuit has received no sustained attention: the preclusive effect that a judgment in a class action should have upon the other, non-class claims of absentees. The omission is a serious one. If claim and issue preclusion were to operate in their normal mode when a claim is certified for class treatment, absentees would sometimes face a serious threat of having their high-value individual claims compromised. Such a threat, in turn, can create ex ante conflicts of interest within a class that can prevent certification if left unresolved. Those few courts that have recognized this problem have thrown up their hands in a remarkable expression of judicial helplessness, refusing to certify socially desirable classes for fear of the preclusive consequences. Worse, most courts have failed to address the problem at all, certifying classes that place the high-value claims of absentees at risk.

It is not merely a lack of diligence that has produced this state of affairs. The reluctance of courts to address preclusion problems at the outset of a class proceeding has resulted from a deep confusion about the positive-law foundations of a judgment's preclusive effects. While the lessons of Erie have taken firm root in our analysis of the broad rules of decision that courts set forth when they shape the common law, those lessons have not yet assumed their proper place in our analysis of the more specialized rules of decision that courts articulate when they attach preclusive force to a judgment.

This Article offers the first systematic examination of these important doctrinal and conceptual issues. It explains the threat that claim and issue preclusion can pose to class members when those doctrines are applied, unaltered, to class litigation. It then offers a more careful account of the positive-law foundations of a judgment's preclusive effect, situating preclusion within the conceptual tradition that is already well established in our analysis of the common law. Most important, the Article marks out the path that will allow courts to reclaim their proper role in constraining the preclusive effects of the class-action lawsuits that they shepherd to judgment.

Keywords: Class actions, preclusion, res judicata, judgments, conflict of laws, employment discrimination, Title VII, mass tort, settlement

Accepted Paper Series