Opting Out of Liability: The Forthcoming, Near-Total Demise of the Modern Class Action

Abstract

It is reasonable to expect that courts will demonstrate great solicitude for the recent innovation that I term "collective action waivers" - i.e., contractual provisions contained within arbitration agreements whereby consumers and others waive their rights to participate in any form of collective litigation or class arbitration. The history of mass tort class actions and the hegemonic expansion of pro-arbitration jurisprudence compel this conclusion. And, as the now-dominant economic model of contract law has moved the focus of courts from the value of consent to the value of efficiency, arbitration agreements found in all manner of shrink-wrap, scroll-text and bill-stuffer notices are increasingly upheld. As a consequence, we are rapidly approaching a world in which companies may opt out of exposure to class actions in such areas as consumer cases, civil rights, antitrust and ERISA; even the classic Rule 10b-5 securities fraud class may be an endangered species.

Legal scholarship to date has tended to focus on optimizing the rules that govern all the various aspects of class action litigation. Fundamentally and understandably accepting class actions as a permanent fixture on the legal landscape, scholars draw on their various perspectival theories to offer reforms to current practice. But the potency of collective action waivers under current doctrine, and inevitable forthcoming efforts to extend their reach into new areas of law and business, should force scholars to confront a more binary question: are class actions, warts and all, a good thing or a bad thing?