A New Day for the Defendant Class Action?
F.R.C.P. 23 clearly states that “one or more members of a class may sue or be sued as representative parties on behalf of all members . . . .” As of a 2011 law review article by Francis Shen, however, there have only been 177 “defendant class actions” filed in federal courts. Ever. My research suggests that in the history of every district court within the 10th Circuit, one defendant class action has been certified and three requests have been denied. See In re Integra Realty Resources, Inc., 262 F.3d 1089, 1112 (10th Cir. 2001) (affirming binding effect of settlement on defendant class).
A defendant class action means that one or more “named defendants” are sued on behalf of all similarly situated defendants. Provided the class is certified and there is proper notice, it has the potential to bind all members of the class, regardless of whether they individually participate in their own defense. Primarily this makes sense where the number of defendants would make individual suit impossible or uneconomical, such as in instances of illegal file sharing. It may also be appropriate where the aggregate economic effects of binding a defendant class—whether to injunctive relief or a judgment for economic damages—creates important and necessarily broad economic incentives and disincentives to certain types of behavior that are not otherwise easily regulated or prosecuted separately. This may be especially true where a defendant class action is pursued by a private litigant in the role of “private attorney general.” In other words, private enforcement a statutory cause of action that may also be enforced by the government, and often where a statutorily mandatory or discretionary award of attorney fees is intended to motivate private counsel to take on some of the burden of government enforcement. Tort-reform advocates may be torn on this type of “private attorney general” lawsuit—which predominates, their economic desire to see less litigation or their principled advocacy of open and free-market enforcement mechanisms?
The defendant class action will probably remain relatively rare, though as Prof. Shen argues this may change with economic and societal evolution. Since his article in 2011, the continuing shift toward blockchain and cryptocurrency-mediated commerce, the “gig-economy,” and a network-centric approach to data, exchange, and value generally all support the argument that we may see significantly more defendant class actions in the future. At a minimum, in any lawsuit naming (or potentially naming) a significant number of defendants (and especially unknown or “John Doe” entities), one should at least review F.R.C.P. 23’s defendant class action language and consider the possibility for 5 minutes.