Taking Adequacy Seriously: The Inadequate Assessment of Adequacy in Litigation and Settlement Classes
59 Pages Posted: 25 Jan 2013
Date Written: 2004
Because the collateral attack problem is so vital to the sanctity of settlement classes, the locus of the debate over the future of settlement classes is centrally located in the issue of adequacy. Today, it seems beyond cavil that the federal class action rule authorizes settlement classes, even without a specific provision for settlement classes in Rule 23 of the Federal Rules of Civil Procedure. Indeed, the great rulemaking debate of the late 1990s over the possible amendment of Rule 23(b) to include a new subdivision that would have specifically authorized settlement classes now seems a quaint tempest in the class action teapot.
The Agent Orange litigation coalesced many of the long-running debates and problems with settlement classes, including problems relating to attorney and judicial conduct in negotiating and finalizing class action settlement, adequacy of representation, and the possibility of collateral attack. And, because the Supreme Court split over the issue and failed to ultimately address or decide the important settlement class issues in that appeal, the future of settlement classes remains substantially problematic, troubling, and uncertain. The most important question that all actors in the system want answered is: will the settlement stand for all time? Unfortunately, the answer to this question has been left vague and doubtful by the Supreme Court's troubling deadlock.
Into this jurisprudential miasma, then, the possibility of subsequent collateral attack looms as the single-most threatening challenge for the resolution of aggregate disputes through the class action mechanism. In this context, the core issue of adequacy has moved to center stage in the ongoing debate over class action jurisprudence.
This paper advances three very simple but important contentions. First, courts and litigants ― meaning both plaintiff and defense counsel ― do a very poor job of ensuring adequacy of representation at the front end of class action litigation. This is true both in situations where the parties are seeking certification of either a litigation class or a conditional class. Second, for a variety of reasons, courts do a fairly poor job of ensuring adequacy of representation at the time of the approval of settlement-only classes under Rule 23(e) on the back end of class litigation. Third, these systemic failures are a grave mistake, because adequacy of representation is significant in class action litigation in important ways that do not necessarily matter in ordinary litigation.
To put the case simply, courts pay lip service to the concept of adequate representation but fail to robustly engage in any meaningful inquiry to establish the existence of such adequate representation. For judges, the adequacy inquiry usually is the least-rigorously examined requirement for certification, either for litigation or for settlement classes. Instead, courts routinely wave their blessings over class counsel and proposed class representatives and presumptively make findings of adequacy on nonexistent or scant factual showings.
As a consequence of these dual failures, both at the front end and the back end of class action litigation, courts and the parties before them set the stage for subsequent collateral attack, which often occurs many years later. With the passage of time, courts in distant forums or after lengthy periods of time must re-examine questions relating to adequacy of representation and reconstruct such findings years after the initial inquiry, often utilizing an exceedingly poor factual record. The collateral attack against the Agent Orange settlement is the poster-child for this precise set of problems.
It would seem, then, that the future of settlement classes is imperiled to the extent that courts and litigants lack sufficient gravitas about the adequacy inquiry. Because the adequacy inquiry is so central to the durability of negotiated settlements, I argue for a more robust, meaningful set of standards to govern courts in the adequacy determination. Furthermore, I also urge a more robust, vigorous judicial scrutiny of the adequacy requirement to ensure this requirement is actually, not presumptively, satisfied. In short, the best way to make settlement classes attack-proof is to ensure adequate representation at the outset of class litigation and meaningfully convince a judicial officer that interests of absent class members are actually protected from attorney self-dealing and other objectionable conduct.
Keywords: Federal Rule 23, class action litigation, adequacy of representation, settlement classes, collateral attack, Stephenson v. Dow Chemical, Agent Orange
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