Confronting the Myth of 'State Court Class Action Abuses' Through an Understanding of Heuristics and a Plea for More Statistics
48 Pages Posted: 24 Mar 2013 Last revised: 25 Apr 2015
Date Written: July 26, 2013
The Supreme Court heard six cases involving class actions this term. One of these cases, Standard Fire Insurance Company v. Knowles, brought the Class Action Fairness Act to the Court for the first time. Petitioner insurance company and its numerous business-interest amici repeatedly claimed before the Court that "state court class action abuses" justified removal of the case (which was based on state law and filed in state court) to federal court.
The charge of a "flood" of "abusive state court class actions" echoed the same rhetoric that CAFA's supporters used a decade ago in their ultimately successful efforts to pass the legislation. Unfortunately for the quality of the debate, then and now, no current data and very little past data about class actions are readily and publicly available, for federal or state courts. In other words, courts in the United States offer no data on such basic questions as the number of cases filed as class actions, the percentage of cases designated as class actions that are eventually certified as such, or the ultimate disposition of such cases.
To be sure, government-sponsored and private academic researchers have compiled a few databases that provided partial answers to some of these questions. But these limited efforts are well beyond the resources and skill available to the public, the press, and even to most policy-makers and the Court.
What does the lack of baseline data on class actions mean? A wealth of psychological research has shown that human cognition and judgment are subject to a variety of heuristics and biases. For example, the mantra of "state court class action abuses" has a "priming effect" making it easier to see or imagine such "abuses." Further, the mind automatically attempts to create a coherent story out of the information it has, even if that information is incomplete or invalid. This manifests itself in the "anchoring effect," the "availability heuristic," and the "representativeness heuristic," which are exploited by those spreading the myth of "state court class action abuses."
The Court may not have been able to resist the lure of class action mythology as it considered the six class action cases this term. In four of the six cases, the Court reversed the lower court and held against the plaintiff class.
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By Jay Tidmarsh