Wednesday, August 22, 2012
Eric Voigt (Faulkner) has posted to SSRN A Company's Voluntary Refund Program for Consumers Can Be a Fair and Efficient Alternative to a Class Action. The abstract provides:
Consumer product companies are establishing internal programs where they are voluntarily compensating consumers for damages caused by their products. When a company implements a refund program in response to a threatened or pending class action, may federal courts rely solely on the voluntary refunds in denying class certification? The short answer is yes.
This Article analyzes Rule 23(b)(3) of the Federal Rules of Civil Procedure and the requirement that a class action be "superior to other available methods for fairly and efficiently adjudicating the controversy." The Article argues that courts must compare the superiority of a class action not only to judicial procedures but also to a company's voluntary refund program. This Article also contends that a court must deny class certification when a reimbursement policy is fair and efficient. These arguments are strongly supported by the Advisory Committee Notes to the 1966 amendment to Rule 23, commentary by two former members of the Committee, the original purpose of the superiority requirement, and courts' and commentators' initial interpretations of the 1966 amendment. Last, the Article discusses what features a refund program must have to be a fair and efficient alternative to a class action.
Surprisingly, no federal court or scholar has analyzed the history or purpose of Rule 23(b)(3) as it applies to voluntary refund programs. Further, the relevancy of a refund program to the denial of class certification has been addressed in only one article (which took an opposing view) and by only a few courts.