Wednesday, July 25, 2012
A. Benjamin Spencer (Washington & Lee) has posted Class Actions, Heightened Commonality, and Declining Access to Justice to SSRN.
A prerequisite to being certified as a class under Rule 23 of the Federal Rules of Civil Procedure is that there are “questions of law or fact common to the class.” Although this “commonality” requirement had heretofore been regarded as something that was easily satisfied, in Wal-Mart Stores, Inc. v. Dukes the Supreme Court gave it new vitality by reading into it an obligation to identify among the class a common injury and common questions that are “central” to the dispute. Not only is such a reading of Rule 23’s commonality requirement unsupported by the text of the rule, but it also is at odds with the historical understanding of commonality in both the class action and joinder contexts. The Court’s articulation of a heightened commonality standard can be explained by a combination of its negative view of the merits of the discrimination claims at issue in Dukes, the conflation of the predominance requirement with commonality, and the Court’s apparent penchant for favoring restrictive interpretations of procedural rules that otherwise promote access. Although an unfortunate consequence of the Dukes Court’s heightening of the commonality standard will be the enlivening of challenges to class certifications that otherwise would never have been imagined, this Article urges the Court to reject heightened commonality and read Rule 23 in a manner that remains true to the language and history of the common question requirement.
The latest issue of the Journal of Empirical Legal Studies contains an article by Blakeley B. McShane, Oliver P. Watson, Tom Baker, and Sean J. Griffith entitled Predicting Securities Fraud Settlements and Amounts: A Hierarchical Bayesian Model of Federal Securities Class Action Lawsuits (Volume 9, Issue 3, Page 482, September 2012).
This article develops models that predict the incidence and amount of settlements for federal class action securities fraud litigation in the post-PLSRA period. We build hierarchical Bayesian models using data that come principally from Riskmetrics and identify several important predictors of settlement incidence (e.g., the number of different types of securities associated with a case, the company return during the class period) and settlement amount (e.g., market capitalization, measures of newsworthiness). Our models also allow us to estimate how the circuit court a case is filed in as well as the industry of the plaintiff firm associate with settlement outcomes. Finally, they allow us to accurately assess the variance of individual case outcomes revealing substantial amounts of heterogeneity in variance across cases.
Tuesday, July 24, 2012
Monday, July 23, 2012
Samuel Issacharoff (NYU) has posted Assembling Class Actions to SSRN.
Five times in the past two years, the Supreme Court has engaged the propriety of class actions. Taken together, these cases revisit certain core issues in class action law, all turning on the need and justification for treating individuals as part of a collective entity for litigation purposes. When examined from the perspective of legal treatment of individuals as part of a collective – assembling the class action, in the terminology of the title – three distinct aspects of class organization stand out. First, the existence of the litigation entity requires that someone be in charge, and that in turn raises the problem of how to ensure the faithfulness of the appointed agent. Second, the decision to forge a litigation entity necessarily empowers one side of the dispute, and that requires some justification. And, finally, even when litigation entities exist, class action law must come to terms with the range of individual autonomy that should still be recognized, including the ability to contract out of collective representation. As developed in the difficult recent class action cases, the questions of leadership, underwriting, and autonomy help define how modern class action practice endeavors to provide equality of treatment and predictability in the interaction between the individual insults of aggrieved citizens and the undiscriminating consequences of mass society.