Class Action Squared: Multistate Actions and Agency Dilemmas
56 Pages Posted: 3 Oct 2018 Last revised: 16 Apr 2020
Date Written: September 19, 2018
As the Supreme Court continues to restrict the reach of private class actions, numerous commentators have championed public enforcement actions by state attorneys general (AGs) as a superior alternative to hold corporations accountable for misconduct. While AG actions fill some of the void left by the forced retreat of the private class action, few scholars have seriously considered whether the agency problems that exist in private class actions also occur in AG actions. And, until now, no scholar has recognized the unique agency problems that arise when AGs act together in multistate actions.
Multistate actions are made up of two discrete layers of “class action.” On the first layer, AGs frequently aggregate the claims of state residents to bring actions on their behalf, with AGs acting like lead counsel and state residents resembling class members. On the second layer, when multiple AGs bring action together, another “class action” of a sort emerges, with a few AGs leading a “class” of states and their combined state residents. In other words, multistate action is class action squared.
Agency problems are not simply doubled in multistate actions by virtue of being class action squared. Rather, an entirely new host of agency dilemmas arise when the two layers of “class action” interact with each other. Put more simply, “class action squared” problems create temptations for AGs to “beg, borrow, and steal” in multistate actions in ways they could not if they pursued actions independently. These problems raise the question of whether multistate action is really a viable substitute for the private class action and challenge the notion that multistate action is better than states going it alone.
Keywords: civil enforcement, civil procedure, corporate law, consumer protection, state attorneys general
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