Arguing Class Actions is a monthly column by Adam J. Levitt for the National Law Journal.
Reprinted with permission from the July 1, 2024 edition of the National Law Journal. © 2024 ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved.
In the typical class action brought pursuant to Rule 23 of the Federal Rules of Civil Procedure, a single plaintiff brings claims on behalf of a group of absent plaintiffs. This structure provides the necessary mechanism to litigate claims where a defendant is alleged to have harmed a large group of individuals in a small enough amount that no single plaintiff has sufficient incentive on its own to pursue the wrongdoing individually.
But Rule 23 of the Federal Rules of Civil Procedure not only permits a representative plaintiff to sue on behalf of a class of persons or entities harmed by defendants, but also provides that a defendant may be sued as a member of a class: “one or more members of a class may … be sued as representative parties.” Fed. R. Civ. P. 23(a).
Defendant class actions are viewed as “one of the rarest types of complex litigation,” in fact “so rare they have been compared to ‘unicorns.'” See Bell v. Brockett, 922 F.3d 502, 504 (4th Cir. 2019). And while seldom used, defendant class actions provide practitioners with a tool which, if employed in the appropriate case, can be both valuable and effective. Indeed, a defendant class action may provide numerous benefits and efficiencies to all parties. For plaintiffs, a defendant class action may offer the following potential advantages:
- The ability to seek recovery from multiple defendants at once, rather than pursuing the same or similar relief from each defendant one at a time;
- The ability to seek global injunctive relief and enjoin multiple defendants, rather than just one;
- The efficiencies associated with litigating once on all claims, rather than multiple times against multiple defendants in multiple forums;
- The ability to aggregate and prosecute claims that might not otherwise be economically feasible absent a defendant class;
- The ability to toll limitations periods against defendants who cannot otherwise be served in multiple individual suits before the expiration of the limitations period; and
- The possibility of easing obstacles relating to personal jurisdiction and venue against nonresident defendants, which would preclude individual litigation against them in the forum state absent a defendant class action.
There are benefits to defendant class actions for defendants as well. Those benefits may include: lowering defense costs by leveraging the economies of scale of acting in concert with other class members; reducing the costs of resolving what may otherwise be perceived as nuisance claims; and avoiding inconsistent rulings in multiple cases proceeding at varying paces. Similarly, judicial considerations may also factor into the effective use of defendant class actions. Indeed, defendant class actions might afford courts the ability to achieve efficiencies by adjudicating one rather than many cases and simultaneously avoiding inconsistent outcomes.
Types of Cases
Defendant class actions may be appropriate for any number of cases, including the following:
- Constitutional law. Defendant class actions can be used to enjoin the enforcement of unconstitutional laws by private attorneys general and government officials. See Nelson v. Warner, 336 F.R.D. 118 (2020) (certifying defendant class of all West Virginia county ballot commissions in action seeking declaratory and injunctive relief with respect to allegedly unconstitutional ballot rule); see also Private Attorneys General and the Defendant Class Action, 135 Harv. L. Rev. 1419 (2022).
- Drugs and pharmaceutical litigation. In antitrust price-fixing cases, where each participant in an alleged conspiracy is jointly and severally liable to victims of the scheme, a plaintiff might have one or more claims against each member of the defendant class even though that plaintiff dealt only with a subset of the class of defendants alleged to be part of the conspiracy. See In re Uranium Antitrust Litigation, 617 F.2d 1248, 1257 (7th Cir. 1980). Similarly, in Sebo v. Rubenstein, 188 F.R.D. 10 (N.D. Ill. 1999), the court, relying on Uranium, accepted our argument and certified a defendant class of urologist shareholders in a private lithotripsy venture, concluding that the defendant class satisfied all of the Rule 23 requirements such that “it is possible that plaintiff would forego claims against the defendant class members should a class not be certified. If she indeed undertook separate lawsuits, however, this district would have approximately 100 similar actions to contend with. The court does not view either alternative as superior to a class action.” And the recent opioid litigation involved several different alleged wrongdoers, including manufacturers, distributors, and doctors. In opioids, defendant class actions might allow individuals harmed by opioid use to pursue recoveries against all companies and individuals responsible for the deadly epidemic, so long as each defendant class or subclass satisfied Rule 23’s certification requirements.
- Bankruptcy: Defendant class actions might successfully be used in bankruptcy proceedings where a class of defendants received the improper transfer of estate property. See In re Integra Realty Resources, 354 F.3d 1246 (10th Cir. 2004).
- Firearms and gun violence: Defendant class actions might be used to hold firearm manufacturers liable for damage caused by gun violence. See NAACP v. Acusport, No. 99 CV07037 (E.D.N.Y. filed Oct. 29, 1999) (although the case was dismissed for lack of standing, the court noted that “[t]he evidence presented at trial demonstrated that defendants are responsible for the creation of a public nuisance,” adding that distributors could sharply limit gun violence “voluntarily and through easily implemented changes in marketing and more discriminating control of sales practices”).
And criticisms over the use of defendant class actions are more properly focused on the specifics of each case or ensuring due process protections for defendants (such as an ability to opt-out and sufficiency of notice) rather than the tool itself. For example, in 2019, Maryland adopted a ban on defendant class actions after a Maryland state court certified a defendant class in Yang v. G & C Gulf. Yang involved a class of plaintiffs suing for damages arising out of allegedly illegal “trespass tows.” See Yang v. G & C Gulf, No. 403885-V (Md. Cir. Ct. Jan. 16, 2018). In addition to suing the tow operator, plaintiffs sued—and the court certified—a defendant class of businesses that used the tow company’s services. The Maryland rules committee cited Yang, along with due process concerns in recommending a ban on defendant class actions. See Standing Committee on Rules of Practice and Procedure Notice of Proposed Rule Changes, March 5, 2019, at 1-3. In Yang, however, defendants had no opportunity to opt out, and the first notice of class membership was a mailed postcard that gave little information about the case (notice was not required by law, but ordered by the judge overseeing the case). Notably, Yang was the first defendant class action ever certified in Maryland, providing further evidence that the state’s decision was based on a bad application of defendant class actions, not the mechanism itself. And Maryland’s decision to eliminate defendant class actions appears to be a knee-jerk reaction to the application of a set of rules that lacked protections otherwise offered by federal law and procedure, and the laws of other states.
Ultimately, the defendant class action mechanism serves a niche, but important role in American jurisprudence. Litigators dealing with sprawling misconduct involving multiple bad actors should consider using it.
- Postscript: As I was finalizing this month’s column, the U.S. Supreme Court issued its opinion in Trump v. United States, No. 23-939. Because the purpose and goal of this column is to highlight and discuss key aspects of the greatest civil justice system the world has ever known, this highly politicized opinion from the most polarized Supreme Court in our lifetime will, unfortunately, further erode public confidence in our courts. The 6-3 Supreme Court majority continues to turn out the lights in President Ronald Reagan’s “shining city on a hill” one room at a time—this time in the service of a convicted felon. It’s safe to say that Mrs. Alito will be turning her flag right-side up today in support of this national embarrassment.
—DiCello Levitt partner, Brian O’Mara, and associate, Hani Farah, contributed to this column.
Adam J. Levitt is a founding partner of DiCello Levitt, where he heads the firm’s class action and public client practice groups. He can be reached at [email protected].