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Rethinking Adequacy of Representation Jay Tidmarsh Class representatives and class counsel must adequately represent the members of a class This principle forms the foundation for the modern American class action and it determines the structure of Rule 23 of the Federal Rules of Civil Procedure and every analogous state classaction rule1 The absence of adequate representation dooms the certi cation of a class The gnawing fear that class is 39 39 l 39f 39 through such phrases as collusion con icts of interest 3 selling out the class 4 and iis an enduring criticism of class actions Indeed the demand of adequate representation is so irresistible that in recent years the principle has spread beyond class actions to other forms of aggre gate litigationf Despite the allure of the principle we have very little sense of what adequate representation means how we can measure it or how we can 1 772 cc Professor of Law Notre Dame Law School I thank Roger Trangsrud and participants in faculty forums at Loyola University Chicago School of Law DePaul University College of Law George Washington University Law School and the University of Cincinnati College of Law for discussions and comments on early versions of this Article and Adam Kern for research assistance FED R CIV P 23 Unless otherwise stated all references to Rules are to the Federal Rules of Civil Procedure See Hansber ry v Lee 311 US 32 45 1940 rejecting the representation as inadequate in part because it afforded opportunities for the fraudulent and collusive sacri ce of the righw of absent parties Susan P Koniak Feasting While the Widow Weeps Georgine v Arnchern Products Inc 80 CORNELL L REV 1045 1048 1995 describing collusion between class counsel and the defendants in a masstort classaction settlement 3 See Amchem Prods Inc v Windsor 521 US 591 625 1997 stating that the inquiry into adequacy of representation serves to uncover con icw of interest between named parties and the class they seek to represent 4 See Culver v City ofMilWaukee 277 F3d 908 910 7th Cir 2002 recognizing the danger that the lawyer will sell out the class in exchange for the defendant s tacit agreement not to challenge the lawyer s fee request 5 See Bruce Hay amp David Rosenberg Sweetheart and Blackmail Settlements in Class Actions Reality and Remedy 75 NOTRE DAME L REV 1377 1377 2000 noting that one of the dangers associated with the settlement of class actions is the roblern of sweetheart settlements in which the class members interests are compromised by class counsel Charles Silver Class ActionsiRepresenmtive Proceedings in 5 ENCYCLOPEDIA OF LAW AND ECONOMICS 194 213 Boudewijn Bouckaert amp Gerrit De Geest eds 2000 discussing four types of sWeetheart deals 6 See PRINCIPLES OF THE LAW OF AGGREGATE LITIGATION 105 Tentative Dra No 1 2008 hereina er AGGREGATE LITIGATION suggesting guidelines for dealing with all forms of aggregate litigation to ensure adequate representation Howard M Erichson InformalAggregation Procedural and Ethical Implications of Coordination Among Counsel in Related Lawsuits DUKE L 381 468 2000 arguing that attorneys should in the absence of formal class certi cation use Written cooperation agreements to replicate the same protections available to class action plaintiffs 1138 Texas Law Review Vol 871137 guarantee it7 We use a few heuristicsifor instance con icts of interest and collusion are bad ibut the complexities of classaction practice quickly blur even these seemingly brightline measuring rods8 If you look for them con icts and the possibility of collusion lurk in almost every class action9 The question therefore becomes how great must the con ict of interest be or how strong must the evidence of collusion be in order to deem a class s rep resentation inadequate Some of the dif culty in determining the meaning and measure of adequate representation derives from the ambiguities in Hansberry V Lee11 the seminal case that rooted adequate representation at least in part in the Constitution A greater part of the dif culty is the ambivalent relationship between the requirement of adequate representation and the underlying goal of class actions The class action sweeps together parties with similarly situ ated claims13 thus avoiding one or more of a number of evilsito the litigants to the absent class members or to the court systemithat repetitive individual litigation creates14 But these economic and social bene ts can often be reaped even when the representation of the class members is less than adequate To take a crass example a class action might achieve more deterrent effect at no greater litigation expense if the class representative and class counsel were allowed to split ninetynine percent of the recovery due to class members but such an arrangement would surely doom class 7 See Richard A Nagareda Administering Adequacy in Class Representation 82 TEXAS L REV 287 288 2003 For all the agreement on the centrality of adequate representation to the modern class action there remains remarkably little agreement on the content of that concept or how to enforce it 8 See eg Reynolds v Bene cial Nat l Bank 288 F3d 277 282 7th Cir 2002 ln light of the modesty ofthe stakes We are not disposed to regard this con ict ofinterest as fatal In re Agent Orange Prod Liab Litig 800 F2d 14 19 2d Cir 1986 noting that principles of ef ciency and fairness uniquely implicated in class actions may compel a court to disregard technical con icts of interest in order to allow an attorney to continue representation of the class JACK B WEINSTEIN INDIVIDUAL JUSTICE IN MAss TORT LITIGATION 46 1995 The common practice in mass to cases unfort39unately has been to ignore ethical problems in the name 0 expediency For a discussion of the inevitability of con icts of interest see infra Part II 10 See Charles Silver amp Lynn Baker I Cut You Choose T he Role of Plainti s Counsel In Allocating Settlement Proceeds 84 VA L REV 1465 1468769 1998 There being no Way to eliminate con icw of interest from multipleclaimant representations the only question is how to deal with them 11 311 US 32 1940 12 For a discussion of Hansberry and is ambiguities see infra notes 6amp91 and accompanying text 13 Class actions can be brought on behalf ofa class ofclaimants or against a class ofpersons e former are usually though misleadingly referred to as plaintiff class actions and the latter as defendant class actions See Taylor v Sturgell 128 S Ct 2161 2172 2008 noting that members ofa class are in fact nonparties bound by thejudgment In this Article I will refer only to the far more common plaintiff class action although my analysis applies equally to both types 14 For an expanded description of these evils see infra subpart 1B This arrangement could be economically justi ed on the ground than from the viewpoint of deterrence the recipient of the recovery is irrelevant and the award of the bulk of recovery to the 2009 Rethinking Adequacy of Representation 1139 certi cation because of selfdealing by the representative and counsel Thus adequacy of representation can retard the realization of the bene ts of class treatment The desire to realize those bene ts can lead a court to compro mise on the brightline version of adequacy that absolutely bars class treatment when con icts of interest surface This Article argues that the doctrine of adequacy of representation should be recast to achieve a single easily determined metric Representation by class representatives and counsel is adequate if and only if the represen tation makes class members no worse off than they would have been if they had engaged in individual litigation In explaining this metric Part I begins by locating class actions and adequacy of representation within the tradition of American adversarialism which privileges individual autonomy and self interested behavior in joinder decisions Class actions constitute an excep tion to the principle of individual autonomy and adequate representationi traditionally understood to require the avoidance of con icts of interest or collusioniacts as the antidote to the selfinterest of the class representative and class counsel But this combination of class litigation and adequate rep resentation is inherently unstable As Part II describes the reasons that class actions are thought to be necessary invariably generate the very con icts of interest either among class members or between class members and class counsel that the traditional view of adequate representation forbids Part III then explains how the metric I have describedithe requirement that class representation not worsen the eXpected litigation outcomes of class membersiavoids the friction between the utility of class treatment and the demands of adequate representation Part III also responds to the objections to the use of this metric Throughout this Article I draw on moral philosophy and economics to describe the present conundrum of adequate representation and to justify the new metric for measuring adequacy From within moral and economic theory the metric seems unremarkable It is closely associated with well known principles such as the Rawlsian veil of ignorance and Pareto improvements Why we have not adopted this simple metric and why we must is the story of this Article I The Rise of Adequate Representation This Part lays out the basic argument for the doctrine of adequate representation I begin by considering traditional principles of joinder to class representative and class counsel creates an incentive to maximize recovery For the classic 39 the privateattorney general rationale see genemlly Harry Kalven Jr amp Maurice Rosen eld The Contemporary Function ofthe Class Suit 8 U CHI L REV 684 716717 1941 For a critique of its operation in practice see generally John C Coffee Jr Rescuing the Private Attorney General Why the Model of the Lawyer as Bounty Hunter is Not Working 42 MD L REV 215 1983 This sentence is too simplistic Later I add a necessary re nement concerning a type of classaction litigation known as negativevalue suits See infra text accompanying note 0 1140 Texas Law Review Vol 871137 which class actions constitute a critical exception I describe why class actions are thought to be a necessary exception and why adequate representation is thought to be a necessary corollary to this exception A Traditional Joinder The Principle ofSelf InterestedAutonomy In the American system plaintiffs typically make the critical decisions affecting the structure of their cases who to sue when to sue in which court to sue which claims to assert which lawyer to employ and whether to join forces with other potential plaintiffs17 This master of the complaint con cept is deeply ingrained in the law18 A related and equally embedded principle is one of preclusion One is not bound by a judgment in personam in a litigation in which he is not designated as a party or to which he has not been made a party by service of process 19 In combination the 17 Exceptions exist Through a counterclaim a defendant can add new claims against the plaintiff See FED R CIv P 13a compulsory counterclaims FED R CIv P 13b permissive counterclaims Through a crossclaim a defendant can insert a claim against a coparty ree FED R CIv P 13g and through a thirdparty claim a defendant can add a new party Who is or may be liable to the defendant ree FED R CIv P 14a In addition in limited circumstances procedural codes sometimes mandate when feasible the joinder of persons that the plaintiff has not joined and typically afford nonjoined parties the opportunity to intervene in the case See FED R CIv P 19a necessary joinder FED R CIv P 24a intervention of right FED R CIv P 24b permissive intervention Class actions of course constitute another exception In reality plaintiffs counsel exercises many of these powers See Deborah R Hensler Resolving Mars Toxic T 0er llIythr and Realities 1989 U ILL L REV 89 92797 documenting the marginal degree of control that tort plaintiffs exercise over their claims 18 Strictly speaking the master of the complaint idea refers to the plaintiffs ability to choose the forum by means of including or excluding certain parties and claims in the complaint See eg Lincoln Prop Co v Roche 546 US 81 94 2005 af rming a plaintist right to maintain federal court diversity jurisdiction by declining to permissiver join additional potential defendanw Holmes Group Inc v Vornado Air Circulation Sys Inc 535 US 826 831732 2002 rejecting the view that the presence of a fedeml question in a defendant s counterclaim is suf cient to establish arising under jurisdiction because that view Would undermine the principle that the plaintiff is the master of the complaint by defeating the plaintiffs choice of forum Caterpillar Inc v Williams 482 US 386 395 1987 upholding a plaintist right to select which legal claims to bring as a Way to control the judicial forum in which those claims are heard The Fair v Kohler Die amp Specialty Co 228 US 22 25 1913 Of course the party Who brings a suit is master to decide what law he will rely upon 39 ree alro 16 JAMES WM MOORE MOORE s FEDERAL PRACTICE 107142cv 3d ed 2005 In general the plaintiff is the master of the complaint and has the option of naming only those parties the plaintiff chooses to sue subject only to the rules of joinder of necessary parties But the concept also implies the right to choose counsel See RichardsoniMerrell Inc v Koller 472 US 424 441 1985 Brennan J concurring A fundamental premise of the adversary system is that individuals have the right to retain the attorney of their choice to represent their interests in judicial proceedings id at 442 Stevens J dissenting Everyone must agree that the litigant s freedom to choose his own lawyer in a civil case is a fundamental right 19 Hansberry v Lee 311 US 32 40 194039 accord Richards v Jefferson County 517 US 793 798799 1996 Martin v Wilks 490 Us 755 761764 1989 Chase Nat l Bank v Norwalk 291 US 431 441 1934 Hamberry elevated this principle to constitutional stature rooting it in notions of both due process and full faith and credit See Hamberry 311 US at 40741 Cases have recognized exceptions to the principle in the conclaves of class actions Hamberry 311 US at 4139 special remedial schemes such as bankruptcy llIartin v Wilkr 490 US at 762 n239 suits brought by those in privity with a prior party Montana v United States 440 US 147 153 197939 2009 Rethinking Adequacy of Representation 1141 two principles mean that no judgment can bind a plaintiff unless she consents tojoin the case as a party Effectively therefore the default principle is the permissive or voluntary joinder of plaintiffs Each plaintiff must agree to join the case At the federal level Rule 20a embodies this principle and permits the joinder of plaintiffs when their claims for relief arise out of the same transaction occurrence or series of transactions or occurrences 20 and any question of law or fact common to all plaintiffs will arise in the action 21 Although am biguously eXpressed in the word may 22 the idea underlying Rule 20a is to give each plaintiff the choice to join a case23 Voluntary joinder is highly consonant with the adversarial approach to litigation employed in American courts The adversarial system places con trol over critical litigation decisions regarding the shaping of proofs and arguments in the hands of each party24 Because few decisions so affect the proofs and arguments as the joinder of those with whom and against whom the case will proceed placing the joinder decision in the hands of each and in three other limited areas see Taylor v Sturgell 128 S Ct 2161 2172773 2008 Taylor identi ed these three circumstances as a nonparty s agreement to be bound by a judgment a nonparty s assumption of control over prior litigation and litigation brought by a nonparty proxy on behalf of a party to prior litigation 1d 20 FED R CIv P 20a1A 21 FED R CIv P 20a1B Because it is dif th to imagine any claims involving the same transaction or occurrence that Would not also involve a common question of law or fact the independent signi cance of Rule 20a1B is uncertain See JAY TIDMARSH amp ROGER H TRANGSRUD COMPLEX LITIGATION AND THE ADVERSARY SYSTEM 108 1998 questioning Whether the common question of law or fact requirement in Rule 20 is super uous 22 See FED R CIv P 20a1 Persons mayjoin in one action as plaintiffs 23 Indeed the idea of individual consent is so embedded in Rule 20a that despite the arguable ambiguity in the rule it is dif th to nd cases that discuss Whether a plaintiff can use Rule 20a to join another plaintiff involuntarily In Cle Ware Rayeo Inc v Perlstein 401 F Supp 1231 SDNY 1975 the court granted a motion to make a thirdparty defendant an additional plaintiff but it was not clear from the opinion Whether the thirdparty defendant consented to joinder as a plaintiff or was joined involuntarily See id at 123273 joining a corporation as a party plaintiff a er a merger between that corporation and the named plaintiff In Lyne v Arthur Anderson amp Co No 91 C 1885 1991 WL 247576 ND Ill Nov 12 1991 a court refused to allow ten plaintiffs who had joined together under Rule 20a to use the rule to join another seven plaintiffs involuntarily noting that there is nothing fundamentally fair about joining plaintiffs who have expressed no interest in participating in this litigation 1d at 3 e Lon L Fuller The Forms and Limits ofAdjudieation 92 HARV L REv 353 383 4 1978 The true signi cance of partisan advocacy lies deeper touching the integrity of the adjudicative process iwelf Each advocate comes to the hearing prepared to present his proofs andargurn 25 Cf Hilao v Estate of Marcos 103 F3d 767 782 7 9th Cir 1996 permitting proof of damages through statistical sampling and a master s testimony rather than individualized proof of damages in a class action containing 10000 members Experimental data suggest that the aggregation of claims increases the likelihood of recovery on Weak claims but suppresses the value of strong claims Irwin A Horowitz amp Kenneth S Bordens The E 39eets of Outlier Presence Plainti 39Po lation Size and Aggregation of Plainti fs on Simulated Civil Jury Decisions 12 LAW amp HUM BEHAv 209 226 1988 hereina er Horowitz amp Bordens Aggregation see Irwin A Horowitz amp Kenneth S Bordens The Consolidation of Plainti fs The E 39eets of Number of Plainti fs on irors Liability Decisions Damage Awards and Cognitive Processing of Evidence 1142 Texas Law Review Vol 871137 plaintiff makes perfect sense from the viewpoint of adversarial theory At a deeper level both the adversarial system in general and voluntary joinder in particular respond to the same philosophical intuition about individual autonomy Allowing individuals the freedom to act on and to govern their own legal affairs is a political and moral good2 The American version of adversarialism embodies another principle In making basic decisions regarding the structure and prosecution of a case a plaintiff is entitled to be guided by selfinterest The relationship between autonomy and selfinterest is evident but hardly inevitable for instance a Kantian conception of autonomy leads to the recognition of duties that can not be justi ed by and often are inconsistent with an individual s self interest27 Whatever the philosophical justi cation the American litigation system does not eXpect litigants to be concerned with the effects of their liti gation decisions on the positions or rights of others The freedom to act given to the plaintiff in the adversarial system includes the freedom to act in a decidedly selfinterested fashion Thus a plaintiff is within her rights to join with others when it advances her interests and equally within her rights to refuse to join with others when doing so does not advance her interestsi even when other plaintiffs claims the defendant s position or society s in terests are made worse by her decision 85 J APPLIED PSYCHOL 909 914 2000 hereina er Horowitz amp Bordens Consolidation reporting data showing that the likelihood of recovery increases with the inclusion of more plaintiffs but the average damage award decreases if more than four plaintiffs are aggregated 26 See STEPHAN LANDSMAN READINGS ON ADVERSARIAL JUSTICE THE AMERICAN APPROACH TO ADJ39UDICATION 33739 1988 defending the adversarial process as important to maintaining a free socie 39 Monroe H Freedman How Lawyers Act in the Interests ofJustice 70 FORDHAM L REV 1717 1727 2002 Working Within the rule of law in our constitutionalized advers system We enhance our clients autonomy as free citizens in a free society Fuller supra note 24 at 372 discussing the relationship between adjudication and the rule of law 27 See Immanuel Kant On the Common Saying T his May Be T me in Theory But It Does Not Apply in Practice reprinted in KANT POLITICAL WRITINGS 61 70 Hans Reiss ed HB Nisbet trans 2d ed 1991 The concept of duty is far more power l incisive and likely to promote success than all incentives borrowed from the sel sh principle of happiness 39 David Luban Lawyers as Upholders of Human Digrity When They Aren t Busy Assaulting It 2005 U ILL L REV 815 826 Kantian autonomy represents freedom achieved through stoic selfcontrol and selfcommand it means reasoned selfrestmint Freedom of choice represents casting off restrainw 28 Due to the costliness of litigation a plaintiffs lawsuit almost invariably worsens the defendant s position I do not suggest that it is unjust for the plaintiff to invoke the machinery of the legal system when she has a noanivolous claim What I mean When I describe a plaintiffs Worsening of the positions of other plaintiffs defendants or society is the plaintiffs imposition of costs above and beyond the direct and ordinary cosw of litigating and satisfying a judgment or settlement To take a pamdigmatic situation of Worsening a defendant s position consider an interpleadertype scenario in which a defendant holds 1000 shares of stock that multiple plaintiffs claim If one plaintiff successfully brings an action and recovers the stock the defendant might be subject to later suiw by other plaintiffs Who as nonparties to the rst case are not bound by the nding in the rst case that the stock belongs to the rst plaintiff See supra note 19 and accompanying text The defendant might thus be subject to numerous judgmenw When only one is appropriate To take a paradigmatic situation of Worsening other potential plaintiffs positions if assume that the sum total of claims exceeds a defendant s assets an early plaintiff that receives 2009 Rethinking Adequacy of Representation 1143 Viewed from the vantage point of moral philosophy this license to act in a purely selfinterested way and to ignore the harms that actions cause others is intriguing Somewhat simplistically ethical theories can be divided into the nonconsequentialist ie evaluating the moral signi cance of actions without regard to their consequences and the consequentialist ie evaluat ing the moral signi cance of actions by evaluating their consequences29 Nonconsequentialist ethical theories subdivide into two branches virtue ethics which emphasizes the development of moral character in the actor30 and deontological ethics which emphasizes the moral quality of the action and often leads to the speci cation of duties rules and obligations31 Conse quentialist theories subdivide into three branches The rst is egoism which involves either a claim that people inevitably act only in their own self interest psychological egoism or a claim that they should act only in their own selfinterest ethical egoism3 The opposite theory is altruism whic full satisfaction can cause later plaintiffs to receive less than a proportional Share of the defendant s assets The paradigmatic example of increasing social costs results from a re isal to join with similarly situated plaintiffs thus generating unnecessary expenses associated with the repetitive relitigation of common issues Another potential cost in entrusting joinder decisions to the plaintiff is a Shi in the plaintiffs favor of the probability of recovery when multiple cases are joined See swra note 25 If we as um that a decision rendered in individual litigation is the most accurate an admittedly controversial assumption a Shi in the outcome due to joinder makes a judgment less accumte Loss in accuracy is a cost to the defendant as well as a social cost See RICHARD A POSNER ECONOMIC ANALYSIS OF LAW 2117212 at 593795 7th ed 2007 arguing that from the perspective of an individual defendant or society when the cost of judicial error outweighs the per case cost of reducing the chance of such error the result of judicial error is a net social loss which should not be tolerated The extent of this cost is uncertain for the loss in accuracy due to the aggregation of claims might be offset by lower perplaintiff awards in aggregated proceedings See Horowitz amp Bordens Consolidation supra note 25 at 914 9 Walter Sinnott Armstrong Consewentialism in THE STANFORD ENCYCLOPEDIA OF PHILOSOPHY Edward N Zalta ed 2008 hereina er ENCYCLOPEDIA OF PHILOSOPHY http nlztn tznfnrd 39 39 39 quot F 39 quot as is name suggests is the view that normative properties depend only on consequences 30 Rosalind Hursthouse Virtue Ethics in ENCYCLOPEDIA OF PHILOSOPHY supra note 29 httn39 nlatn tnnFnrd 39 39 39 39r V39 theories are sometimes referred to as aretzic theories alter the Greek word arete or MMe See Lawrence B Solum Public Legal Reasoning 94 VA L REV 1449 1463 2006 referring to virtue theories as aretaic theories and describing the Greek origin of the term 31 Larry Alexander amp Michael Moore Deontological Ethics in ENCYCLOPEDIA OF PHILOSOPHY note 29 MM nlzfn tanfnrd 39 39 39 39 A logical Some deontological theories exclude consideration of the consequences of actions but others allow such consideration while denying that the onl measure of good action is its consequences See So um supra note 30 at 1463 Some deontological theories exclude consequentialist reasons altogether Other deontological moral theories allow for the consideration of consequences but maintain that considerations of fairness trump good consequences in other circumstances 32 Robert Shaver Egoism in ENCYCLOPEDIA OF PHILOSOPHY swra note 29 httpplato stanfordeduarchiveswin2002entrieSegoism A related theory is rational egoism which argues that it is rational for a person to act in her selfinterest and irmtional not to 1d Egoist theories allow for the possibility that cooperation among people is possible but they assert that cooperation occurs only when the mutual best interesw of the parties dictate cooperation 1d 1144 Texas Law Review Vol 871137 argues that people should act to advance the interests of others giving little or no regard to their own interests33 The third consequentialist theory is utilitarianism which argues that people should act to maximize the utility of all both self and others34 Neoclassical economic theory which holds that actors should maximize wealth is a form of consequentialism aligned with the utilitarian branch If we seek a philosophical justi cation for the selfregarding nature of American adversarialism the nonconsequentialist theories are barren soil abject selfinterest is not a virtue and deontological theories reject the le gitimacy of acting according to consequences whether it is selfenriching or not Nor for obvious reasons is it possible to justify selfinterested litigation behavior on the consequentialist theory of altruism Therefore the only phi losophical positions that justify plaintiffs license to attend to only their own selfinterest in joinder decisions are egoist or utilitarian The egoist argu mentithat parties should be able to conduct litigation with only their own interests in mindiclearly supports the principle of voluntary joinder But egoism has greater difficulty accounting for the transactional constraint on Rule 20a joinder which can be more readily justi ed on a fairness or a utilitarian basis Utilitarian acceptance of selfinterested behavior however is conditional A plaintiffs selfinterested joinder decisions can be justi ed only if the bene ts of such decisionsiin terms of deterrence of 33 John Doris amp Stephen Stich Moral Psychology Empirical Approaches in ENCYCLOPEDIA OF PHILOSOPHY supra note 29 httn39 nlatn mnfnrd 39 39 I L ernp lWill not deal with the issue of Whether a person must care more for others than for herself or Whether a person is entitled to Weigh her interests proportionally with those of others 34 SinnottArmstrong sqpra note 29 I use Welfare as a neutral term Utilitarian theories disagree amongst themselves about exactly What should be maximized individual happiness social Wellbeing Wealth or preference satisfaction See Solum sqpra note 30 at 1492 exposing contmdictions between and Within utilitarian theories of individual Wellbeing and preference satisfaction 3 See Eyal Zarnir amp Barak Medina Law Morality and Economics Integrating Moral Constraints with Economic Analysis of Law 96 CAL L REV 323 329730 2008 discussing u 39 39tarianism and Welfare economics as examples of consequentialist theories But see Ricth A Posner Utilimrianism Economics and Legal Theory 8 J LEGAL STUD 103 119727 1979 distinguishing between utilitarianism or Welfare maximization and Wealth maximization 36 Desert Empire Bank v Ins Co of N Am 623 F2d 1371 1375 9th Cir 1980 refusing to accept the plaintiffs decision to join defendants under Rule 20a unless the permissive joinder of a defendant will comport with the principles of fundamental fairness Although egoism might justify such restrictionsiwith the argument that some accommodation and cooperation are necessary in order to avoid ruthlessness that would in the end hurt everyone s self interestithe transactional limitation in Rule 20a is better explained by and usually described in terms of ef ciency See eg Mosley v Gen Motors Corp 497 F2d 1330 1332 8th Cir 1974 The purpose of Rule 20a is to promote trial convenience and expedite the nal determination of disputes thereby preventing multiple lawsuits Other restrictions that American adversarialism imposes on selfregarding behaviorisuch as restrictions on the ability of parties to lie or to bring frivolous claims or on the ability of lawyers to represent con icting interesw see FED R Crv P 1139 MODEL RULES OF PROF L CONDUcr R 1749 3345 1983ilikewise are more readily explained on nonegoist Whether virtuebased deontological altruistic or utilitarian rounds 2009 Rethinking Adequacy of Representation 1145 wrongful behavior ef cient disposition of litigation accuracy of judgments and acceptability of judgments among a people with a strong af nity for freedom of action and hostility to government intervention that Americans evince37ioutweigh the bene ts of other joinder arrangements that give the parties less freedom of action38 Because an empirical demonstration that plaintiff autonomy generates these net bene ts has never been made however the utilitarian case for entrusting to the plaintiff the power to make selfinterested joinder decisions is uncertain At best it appears that the American approach to joinder is essentially egoist with some casebycase nonconsequentialist ie fairnessbased and utilitarian constraints on abject selfinterest Egoism and utilitarianism are controversial ethical theories as is the pursuit of wealthmaximizing ef ciency I do not suggest that in adopting an adversarial approach to litigation and in granting plaintiffs wide discre tion in making joinder decisions our AngloAmerican ancestors consciously intended to adopt and apply one or more of these theories As Holmes once observed The law did not begin with a theory It has never worked one out 39 Our adversarial approach in general and our joinder rules in particular are products more of historical circumstance than of deduction from rst principles of moral or economic theory40 Nor am I suggesting that the law of joinder has as its only operative principle the satisfaction of plain tiffs desires Nonetheless whatever we might think of a license to act in a sel sh fashion two signi cant facts stand out rst American adversarialism countenances a high degree of selfinterested behavior in the plaintiffs choice to joinior not to joiniwith other plaintiffs and second that self interested behavior within this sphere can be justi ed on certain philosophical and economic grounds B Class Action Joinder An Incomplete Tempering of the Principle ofSelf InterestedAutonomy Class actions stand the individual plaintiffs joinder autonomy on its head The class action bundles together the claims of similarly situated claimants and nominates a class representative and class counsel to prose cute these claims on each claimant s behalf Thus the members of a class 37 See generally MIRJAN R DAMASKA THE FACES OF JUSTICE AND STATE AUTHORITY 477 70 1986 arguing that the political commitments and structures of a nation determine the nation s basic orientation in is proceduml system 38 Again bene ts is a so Word for I have not suggested any measureiwhether money happiness or some other metricifor these bene ts The ef ciency orientation of the transactional limit on Rule 20a joinder suggesw that our system typically uses an economic or Wealth maximizing approach to measuring bene w See mpra note 36 and accompanying text 39 OLIVER WENDELL HOLMES JR THE COMMON LAw 77 1881 Cf Norman W Spaulding The Rule of Law in Action A Defense ofAdvermry System Values 93 CORNELL L REV 1377 139971403 2008 describing the historical room and evolvin tmdition of the adversarial system 1146 Texas Law Review Vol 871137 lose rights that the American adversarial system affords nonclass litigants Class members do not get the opportunity to decide with whom and against whom to le suit they do not control the forum the timing of their cases or the presentation of the proofs and arguments concerning their claims Mem bers of the class will probably never talk with their lawyer their lawyer will likely never know the details and circumstances of their individual claims Indeed class members might never know that they are parties in the case Yet the judgment obtained on the class s behalf binds the members to the outcome The license to act selfinterestedly by refusing to join another s lawsuit collapses41 Strong reasons must accompany such a fundamental reordering of the litigation paradigm At the federal level Rule 23b provides four such reasons42 First a class action can be certi ed when the plaintiffs autonomy to bring separate actions creates a risk of inconsistent or varying adjudications that would establish incompatible standards of conduct for the defendant43 Second a class action can be certi ed when one plaintiffs autonomous decision to bring a lawsuit might result in a judgment that as a practical matter would be dispositive of the interests of the other members of the class or would substantially impair or impede their ability to protect their interests 44 Third class treatment is proper when nal injunctive re lief or corresponding declaratory relief is appropriate respecting the class as a whole 45 Finally a class action may be maintained when the questions of law or fact common to class members predominate over any questions af fecting only individual members and a class action is superior to other available methods for fairly and ef ciently adjudicating the controversy It is possible to restate and unify these four scenarios in a single principle An individual plaintiffs autonomy to choose not to join with other plaintiffs stops when that choice threatens harm to others47iwhether that harm is to other potential plaintiffs who might nd their own interests 41 As I describe infra at notes 54756 and accompanying text in some circumstances a class member can retain a measure of autonomy by opting out of the class 42 In addition a class action must meet the six requiremenw of Rule 23a These requiremenw can loosely be grouped into two metarequiremenw ef ciency and adequate representation Gen Tel Co of the SW v Falcon 457 Us 147 157 n13 1982 For further discussion see in a notes 78779 and accompanying text 43 FED R CIv P 23b1A 44 FED R CIv P 23b1B 5 FED R CIv P 23b2 46 FED R CIv P 23b3 In assessing these two requiremenw of predominance and superiority Rule 23b3 lisw four relevant factors to consider the class members interests in individually controlling the prosecution of their claims the extent and nature of any individual actions that class members have already brought the desirability or undesirability of concentrating the litigation of the claims in the particular forum and the likely dif culties in managing a class action FED R CIv P 23b3AD 47 A ain the concept of harm does not encompass the imposition of the ordinary cosw of good faith litigation on the defendant or the court system See rupra note 28 and accompanying text 4 2009 Rethinking Adequacy of Representation 1147 impaired by the plaintiffs choice to sue separately to the defendant who might be whipsawed by inconsistent judgments of multiple plaintiffs exer cising their choices to sue separately or else beaten down by the costs of repetitive litigation or to society which nds individual litigation too eXpen sive a luxury to subsidize or too vagarious a method to deter illegal conduct The harm must be more than de minimis Rule 23 allows a class action only when the class of plaintiffs is so numerous that joinder of all members is impracticable 48 Once that threshold is crossed however Rule 23 sacri ces individual class members abilities to pursue selfinterested litigation strate gies to the achievement of a greater good Cast in this light the class action embodies a consequentialist perspective to joinder Avoidance of negative consequences not the inculcation of virtue in litigants or the ful llment of a priori litigation duties toward others is its principal justi cation Indeed Rule 23 works out in a particular litigation conteXt the limits of autonomy Captured in the famous aphorism that my right to swing my st ends where your nose begins49 a central problem in consequentialist ethical theory is to specify the point if any at which a person s autonomy to act must yield to the harm that those actions cause others Rule 23 s answer to that question appears to reject an egoist stance and to embrace a ruleutilitarian approach to class treatment50 In two important ways however Rule 23 retains an orientation toward individual autonomy First class members retain some rights to promote or protect their individual claims In all class actions class members may seek to intervene to present claims or defenses or otherwise to come into the action 51 and in Rule b3 class actions class members are entitled to 48 FED R Crv P 23al 49 The saying is usually used as a shorthand description of Mill s argument for liberty See JOHN STUART MILL ON LIBERTY 1859 reprinted in ON LIBERTY WITH THE SUBJECTION OF WOMEN AND CHAPTERS ON SOCIALISM 13716 56757 75776 94796 Stefan Collini ed Cambridge Univ Press 1989 50 Utilitarian theory can be divided into act utilitarianism and rule utilitarianism Under the former the moral signi cance of an action is determined by Whether that speci c action maximizes utility A problem with act utilitarianism is the costliness of engagi in this inquiry for every action Rule utilitarianism seeks to eliminate those costs by establishing rules of behavior tha in the main maximize utility even though the rule does not maximize for each action the savings from not needing to engage in an actionbyaction evaluation exceed the losses in utility in speci c cases SinnottArmstrong rqpra note 29 Rule 23 s four scenarios for class treatment could thus be seen as the rule makers conclusion about the occasions when in the main the cosw of permitting individual litigation exceed the costs of the lost autonomy that class certi cation entails o e might argue that Rule 23 even re ecw an altruistic rather than a utilitarian impulse allowing individuals to sacri ce their autonomy to bring their own claims and to take up the burden of championing the claims of others Although I do not deny the possibility that a class representative and class counsel might take on class litigation for altruistic reasons the ensuing paragraphs describe the reasons that altruism constitutes a poor justi cation for Rule 23 51 FED R Crv P 23d1Biii 24a 24b see THOMAS E WILLGING ET AL FED PIRICAL TUDY OF LASS CTIONS IN FOUR FEDERAL DISTRICT COURTS 56 1996 indicating that intervention occurred in 0 to 11 of cases in four classaction data sew 1148 Texas Law Review Vol 871137 appear through their own counsel52 Moreover ling a class action does not prevent class members from also ling individual cases or even prevent dueling class actions as long as they beat the class action in the race to judgment or settlement individual class members can enjoy the bene ts of their individual resolution The most signi cant provision retaining individual autonomy however is the optout right for b3 class members54 In effect the b3 optout right returns to the individual the decision of whether to join with others or to strike out independently By requiring an af rmative decision to opt out rather than by adopting a Rule 20a like demand that each plaintiff af rma tively opt in55 Rule 23b3 ips the consequence for doing nothing from nonjoinder to joinder This ip in the default rule is hardly insigni cant the apathetic plaintiff the tardy plaintiff and the plaintiff who never receives notice of the right to opt out lose control of their lawsuits Nonetheless in light of the prevalence of b3 class actions over either bl or b2 class This opportunity to intervene is something less than the ll master of the complaint autonomy guaranteed individual litiganw because the appearing class member loses the right to determine When Where with Whom and against Whom to le suit In addition most courts granted only permissive intervention under Rule 24b id and courts can impose signi cant limitations on the opportunity of permissive intervenors to participate ree 7C CHARLES ALAN WRIGHT ET AL FEDERAL PRACTICE AND PROCEDURE 1922 3d ed 2007 52 FED R CIv P 23c2Biv 53 See Epstein v MCA Inc 179 F3d 641 643744 9th Cir 1999 holding that class members in a state class action Who commenced a sepamte federal class action Were precluded when the state class action Won the race to settlement Rhonda Wasserman Duelin ClarrAetiom 80 EU L REV 461 462 2000 noting that dueling class actions are rampant and discussing the pressure to settle rst on the part of plaintiffs attorneys Although in reasoning is suspect one court has held that a classcerti cation order in a mandatory class action effectively bars separate actions involving the same claims but has further held that this bar violates the AntiInjunction Act 28 USC 2283 2000 when applied to cases led in state court In re Fed Skywalk Cases 680 F2d 1175 1180 1183 8th Cir 1982 of Cooper v Fed Reserve Bank of Richmond 467 Us 867 880 1984 holding that the individual claims of class members not encompassed Within the class allegations are not precluded by the class judgment 54 See FED R CIv P 23c2Bv Because b1A b1B and b2 class actions lack a comparable optout right the are 0 en c e man atory class actions See Ortiz v Fibreboard Corp 527 Us 815 833 n13 1999 contrasting bl class actions lack ofoptout or notice righw to b3 class actions which include these rights Courts have on mre occasion nonetheless fashioned an offbook optout right for class members in mandatory class actions when an optout right Would not create the types of harm that the bl and b2 class actions Were meant to avoid See eg Eubanks v Billington 110 F3d 87 94795 DC Cir 1997 holding that courts have discretion to fashion optouts in bl and b2 class actions when necessary to protect the righw of individual class members County of Suffolk v Long Island Lighting Co 907 F2d 1295 1302 2d Cir 1990 Rule 23 does authorize a district court to allow a class member to opt out ofa bl action under some circumstances 39 of Phillips Petroleum Co v Shutts 472 Us 797 811 n3 1986 leaving open the question of Whether mandatory class actions are consistent with the Due Process Clause Cf 29 USC 216 2000 providing an optin process for Fair Labor Standards Act class actions John Bronsteen amp Owen Fiss The Class Action Rule 78 NOTRE DAME L REv 1419 1446747 2003 arguing that class members should be required to opt into a settlement class 2009 Rethinking Adequacy of Representation 1149 actions Rule 23 s sacri ce of the plaintiffs autonomy to make self regarding joinder choices is less dramatic than it might initially appear The second way in which class actions retain an important egoist cast is this simple and often overlooked fact No one is required to bring a case as a class action Rather the decision to seek class treatment lies in the unfet tered discretion of the class representative and class counsel The class representative and class counsel can make this choice for any of a number of reasons Perhaps the representative is virtuous and wishes to assume the mantle of disinterested and benevolent leadership Perhaps the representative operates from a sense of duty to take no more than a fair share of a defendant s assets or to treat other claimants as equals Perhaps she is altruistic and wants to advance the interests of others above her own Per haps she is utilitarian and believes that class treatment will result in the highest net gain to herself and to others Or perhapsiand here is the rubi she is an egoist whose only interest is advancing her own interests and who sees class treatment as the best way to do so Indeed in a number of situations class treatment can serve a litigant s private interests better than individual litigation For example suppose that the plaintiffs claim were worth only 25 the costs of prosecuting the claim would far exceed the recovery and a selfinterested plaintiff will not pursue the claim But if she could pool her claim with those of thousands of other similarly situated victims the plaintiff could spread the costs of litigation and make the suit worthwhile Likewise even if a plaintiff has an independently viable claim say for 100000 the claim might be weak Joining her claim with those of others might improve the probability of recovery57 and thus increase the expected settlement value of her suit Or perhaps a class repre sentative might hope for a premium above her expected recovery for her service as the class representative58 Another example in which a plaintiff might use class treatment for personal gain occurs when the plaintiff fears 5 See WILLGING ET AL rupra note 51 at 21 stating that 61 of the class actions in four data sew Were certi ed under Rule 23b3 57 For experimental data suggesting that aggregation With other claims increases the likelihood recovery on a Weak claim see Horowitz amp Bordens Aggregation rupra note 25 at 226 The data add fuel to the claim that class actions are a form of legalized blackmail that extorts large recoveries for frivolous cases See In re RhonePoulenc Rorer Inc 51 F3d 1293 1298799 7th Cir 1995 endorsing the view that settlements induced by a small probability of an immense judgment in a class action are blackmail settlements 58 Premium is a neutral Word Sometimes courts award appropriate compensation to class representatives for time spent meeting with class members monitorin cases or responding to discovery MANUAL FOR COMPLEX LITIGATION FOURTH 2162 at 317 n971 2004 Romero v Producers Dairy Foods Inc No 105CV0484DLB 2007 WL 3492841 ED Cal Nov 14 2007 approving 7000 in premiums to two class representatives for their activities But the premium can also be a sweetheart deal for the class representative Who collusiver accepts a large payment in return for agreeing to settle the claims of class members for pennies on the dollar See WILLGING ET AL rqpra note 51 at 26 nding that awards to class representatives occurred in a substantial minority of cases with a median award ofunder 3000 in three districts and 7500 in a fourth rupra note 5 and accompanying text 1150 Texas Law Review Vol 871137 that later litigation by other plaintiffs might effectively undo a remedy that the plaintiff wishes to achieve By forcing them into a case that she controls the class representative effectively binds these plaintiffs to the judgment that she prefers59 As a nal example the plaintiff might wish to retain an effective but pricey counsel who with a selfinterested eye comparing the size of the fee to the opportunity costs of forsaking other legal work will agree to take the case only if it holds the promise of the hefty fee award that a class action might generate60 In each of these examples the egoist representative is willing to bring a class action principally to advance her own interests The nal example also interjects the possibility of an egoist class counsel In these cases neither the class representative nor the class counsel is necessarily hostile to the interests of class members61 The problem is that egoist representatives and counsel are ultimately indifferent to the interests of those whom they representiand that indifference creates the risk that when it is no longer convenient to ad vance the interests of others the selfinterested representative or counsel will abandon those interests Thus arises the great structural dilemma of the American class action As a general matter the American litigation system expects and even extols selfinterested behavior Because of the harm that this autonomy creates in some cases of widespread wrongdoing Rule 23 requires class members to give up a measure of that autonomy What they get in return are a class rep resentative and a class counsel that might be guided by the very selfinterest 59 For instance in Martin v Wilkr 490 Us 755 1989 the Court allowed White employees to le a subsequent lawsuit seeking to challenge a hardfought af rmativeaction consent decree that AfricanAmerican employees had procured 1d at 758759 Had the AfricanAmerican employees joined the White employees as members of the class they might have been able to bind the White employees to the outcome they preferred Another example is Hamberry v Lee 311 Us 32 1940 in which a class representative sought to bind all property owners to the determination that the class representative favoredithat a particular covenant was valid and enforceable See infra notes 66777 and accompanying text A thde example involves one set of plaintiffs Who Want an injunction establishing one type of medicalmonitoring system to detect future health consequences from a defendant s product While another set of plaintiffs prefer a different system eparate cases Were brought the defendant might not be able to comply with both injunctions Cf In re Telectronics Pacing Sys 172 FRD 271 284 5 SD Ohio 1997 describing this possibility as a reason to certify a class under Rule 23b1A If the later injunction takes precedence a harm would befall the original plaintiff Who would nd the earlier judgment effectively overridden 60 Again I describe counsel s motivation to obtain a large fee neutrally On the one hand counsel might Work hard to advance the interests of the class and enhance their recovery thus earning a large fee On the other hand class counsel might collude with the defendant selling out the class by agreeing to nominal individual recoveries in return for a very large fee Compare 28 USC 171171715 2006 banning certain coupon settlements with WILLGING ET AL mpra note 51 at 68 9 nding little evidence that class members received only trivial bene ts in relation to attorneys fees 6 Egoists can advance the interesw of others When those interests enhance or at least do not impede the probability of realizing of their own interests See 5147M note 32 and accompanying text 2009 Rethinking Adequacy of Representation 1151 toward their positionsiand indifference toward the positions of othersithat class members have been required to sacri ce C The Requirement ofAdequate Representation The bridge spanning the gulf between the interests of class members and the actions of the class representative and class counsel is the doctrine of adequate representation The doctrine handles two distinct problems one of incompetence and one of indifference Incompetence concerns class repre sentatives and class counsel who sincerely whether for virtuous deontological altruistic or utilitarian reasons want to represent the interests of class members but are incapable of effectively doing so because of insuf cient nancing experience talent probity or mental capacity Indifference concerns egoist class representatives and class counsel who are willing to represent the interests of class members only to the extent that such representations serve their own interests62 The desire to address these problems does not however fully specify the content of the doctrine Although class actions have ancient roots shap ing the contours of adequate representation is a fairly recent phenomenon63 The phrase shows up in the 1938 version of Rule 2364 Before then it was subsumed within the idea that class actions were maintainable when the rep resentative s claim was one of common interest or general interest to a 62 I use indifference as an umbrella term to describe two different possibilities The rst is true indifference the class representative and class counsel do not care one Way or the other about the interesw of those they represent except to the extent that such interesw are useful to advancing their own interests The second is actual hostility in which promoting the interests of some or all class members will injure the interesw of the class representative or class counsel Cases of hostility are rare but they exist See rupra note 5739 in a notes 104707 and accompanying text39 in a text accompanying notes 119 134 Because they present the same analy cal problemian unwillingness at some point to advance the interesw of class membersiI consider the situations together 63 See generally STEPHEN C YEAZELL FROM MEDIEVAL GROUP LITIGATION TO THE MODERN CLAss ACTION 1987 describing the emergence from its medieval roots of the twentiethcentury class action which for the rst time clearly operated on a congruence of 64 See FED R CIv P 23a 308 Us 689 1939 revised 1966 permitting a class action When amon other things a class representative Wil fair y insure the adequate representation of all Cases before the 19305 tended not to use the phrase adequate representation or variants like adequacy of representation The earliest use of the phmse that I could nd was in 1889 See Lancashire Ins Co v Maxwell 5 NYS 399 401 NY Sup Ct 1889 stating that according to New York s rules of civil procedure one prerequisite of aggregate suits is that the plaintiffs may be adequately and ef ciently represented by one or more of their number less than the Whole The earliest federal referenceian an ambiguous one at thatiwas in 1912 See Carpenter v Knollwood Cemetery 198 F 297 300 D Mass 1912 citing 1 ROGER FOSTER FEDERAL PRACTICE 317 4th ed 1909 asserting that one trustee is held adequately to represent the rest of the trustees in a case involving a deed that secured the rights of real property in a large number of bene ciaries 1152 Texas Law Review Vol 871137 group of parties too numerous to join65 But we can trace the rise of the modern concept of adequate representation to 1940 with Hansberry V Lee Hansberry involved a racially restrictive covenant that was arguably invalid67 But in a prior class action Burke V Kleimartf8 in which a class of signatory landowners sued one of their number who had violated the covenant the class and the defendant stipulated and the court found that the covenant was valid69 When an AfricanAmerican family the Hansberrys bought another property subject to the same covenant one of their defenses against an eviction proceeding brought by a class of landowners was the covenant s invalidity70 The plaintiffs argued that the Hansberrys were pre cluded from raising the argumentithat the question of validity had been decided in Burke and that as successors in interest to a class member in that action the Hansberrys were bound by that decision71 The Illinois courts agreed72 but the US Supreme Court reversed7 The basis for the Supreme Court s decision was the inadequacy of the representation that the Hansberrys received in Burke The Court eXplained It is familiar doctrine of the federal courts that members of a class not present as parties to the litigation may be bound by the judgment where they are in fact adequately represented by parties who are present It is one thing to say that some members of a class may represent other members in a litigation where the sole and common interest of the class in the litigation is either to assert a common right or to chal lenge an asserted obligation It is quite another to hold that all those who are free alternatively either to assert rights or to challenge them are of a single class Suc a selection of representatives for pur poses of litigation whose substantial interests are not necessarily or even probably the same as those whom they are deemed to represent does not afford that protection to absent parties which due process requires Apart from the opportunities it would afford for the 65 See Beatty v Kurtz 27 Us 2 Pet 566 566 1829 recognizing that this is one ofthose cases in which certain persons having a common in eresg may sue in behalf ofthemselves and others for purposes common to all and bene cial to all Frederick v Douglas County 71 NW 798 799 Wis 1897 quoting a statute authoring suit when the question is one of common or general interest of many persons 66 For a discussion of the facw and historical context of the case see Jay Tidmarsh T he Story of Hansberry The Rise of the Modem ClamAction in Crer PROCEDURE STORIES 233 Kevin M Clermont ed 2d ed 2008 Hansbeny v Lee 311US 32 37738 1940 277 111 App 519 App Ct 1934 1d at 52239 see alxo Tidmarsh rupra note 66 at 243744 at 3839 see alxo Tidmarsh rupra note 66 at 262 Hamberry 311 Us at 3839 see alxo Tidmarsh rupra note 66 at 262 Hamberry 311 Us at 3839 see alxo Tidmarsh rupra note 66 at 271 Hamberry 311 Us at 38 ox gt1 IIIIOO th pooo E E a 3 9 m 2009 Rethinking Adequacy of Representation 1153 fraudulent and collusive sacrifice of the rights of absent parties we think that the representation in this case no more satis es the require ments of due process than a trial by a judicial of cer who is in such situation that he may have an interest in the outcome of the litigation in con ict with that of the litigants74 Sensibly enough the H ansberry Court thought that the representative in Burke could not adequately represent both the interests of those home owners who like the representative herself wanted to enforce the covenant and the interests of those home owners who like the Hansberrys wanted not to en force the covenant Those signers or their successors who are interested in challenging the validity of the agreement and resisting its performance are not of the same class in the sense that their interests are identical so that any group who had elected to enforce rights conferred by the agreement could be said to be acting in the interest of any others who were free to deny its obligation75 Hansberry presented a case of indifference rather than a case of incompetence The selfinterest of the class representative in Burke was to enforce the restrictive covenant The best way to do so was to bring a class action which bound every signatory to the determination that the covenant was enforceable The class representative and class counsel76 were at best indifferent and more likely were hostile to the interests of those members of the class that had no interest in enforcing the covenant Thus H ansberry harbored no illusions about the goodness of humanity it accepted the reality that class representatives were going to act self interestedlyior egoistically Its solution was to require a tight alignment of the interests of class representatives and the interests of class members Even if class representatives were selfinterested the rising tide of their self 74 1d at 42745 citations omitted 75 I at 44 76 Although Hamberry focused on the de ciencies of the class representative in Burke the defendanw in Hamberry also alleged that the class counsel in Burke was de cient Brief of Petitioners at 45 Hamberry 311 Us 32 No 29 In particular the defendants argued that class counsel colluded with a willing defense counsel to enter a fraudulent stipulation that the covenant was Valid 1 This allegation of collusion was never proven although it formed the backdrop for the Supreme Court s decision See Hanrberry 311 Us at 45 noting the opportunities that the representation of con icting interesw would afford for the fraudulent and collusive sacri ce of the rights ofabsent parties Tidmarsh rupra note 66 at 267770 77 Presumably all signatories to the covenant had an interest in its enforcement when they signed the agreement during 1927 and 1928 But those interests began to change over time and the covenant ran with each property for twenty ve years Tidmarsh rupra note 66 at 239 The combination of the Great Depression the changing mcial composition of the surrounding neighborhoods white ight and the ready supply of A icanAmerican families willing to pay a premium for housing made some of the original signatories regret their decisions See id at 240 The inexorable law of supply and demand has already washed away restrictive covenants in other areas and it seemed unlikely that the Association could keep its homeowners from eventually breaking rank In addition some new owners of the property likely had different attitudes toward the covenanw than the original owners Nagareda rupra note 7 at 288 1154 Texas Law Review Vol 871137 interest would inevitably lift the boats of class members with similar interests If the interests were not so aligned however the class action could not be maintained Hansberry s rendering of adequate representation has loomed over classaction practice ever since Most evidently it in uences the structure of Rules 23a and g Read together these rules establish two fundamental requirements for all class actions The rst is that a class action be an ef cient vehicle for handling claims78 The secondiand here is Hansberry s in uenceiis that the class representative and class counsel adequately rep resent the interests of class members79 Hansberry has also driven the case law which when deciding questions of adequacy often focuses on the pres ence or absence of the Hansberry evils con icts of interest within the class or collusion by the class representative or class counsel80 The Supreme Court itself has returned only once to the identityofinterest construct Hansberry creatediand has reinforced it In Amchem Products Inc V 78 In particular the requirements of numerosity Rule 23a1 commonality Rule 23a2 and to some extent typicality Rule 23a3 make sure that joint treatment advances economy and ef cienc Numerosi ensures the possibility of realizing economies of scale See Robidoux v Celani 987 F2d 931 936 2d Cir 1993 stating that judicial economy arising from the avoidance of a multiplicity of actions is a relevant factor in determining nurnerosity Commonality and typicality ensure that a common issue exists and that noncommon issues will not sidetrack the caseithus helping to prevent expensive casebycase relitigation of common questions See Gen Tel Co of the SW v Falcon 457 Us 147 157 n13 1982 explaining that commonality and typicality help ensure that maintaining the class action is economical and that the interesw of the class members are interrelated so that they will be fairly and adequately protected in their absence THOMAS D ROWE JR ET AL CIVIL PROCEDURE 648749 2d ed 2008 stating that commonality requires that the class members have common factual or legal issues because otherwise it is dif th to imagine how the class representative could adequately represent the divergent interesw of the members while typicality requires that the class representatives have claims that are ical of the class because otherwise reason exists to doubt the vigor of the representatives advocacy and the ef ciency of the class proceedin ost directly Rule 23a4 requires that the class representative fairly and adequately protect the interesw of the class and Rules 231A and B require a court to consider various matters pertinent to counsel s ability to fairly and adequately represent the interests of the class FED R CIv P 23a4 231 But the demand for adequate representation runs throughout Rules 23a and g which list the prerequisites for class representatives and class counsel Other requiremenw in Rule 23aifor instance that the class representative be a member of a class FED R CIv P 23a that there are questions oflaw or fact common to the class FED R CIv P 23a2 and that the class representative s claims be typical of the claims of the class FED R CIv P 23a3ialso seek to assure a close alignment of interesw amon the class representative the class counsel and the class members See also Falcon 457 Us at 157758 n13 discussing how Rule 23a requires that the class representative s claim be similar to the interests of the class and that class counsel has no con icw of interest 80 See eg Mirfasihi v Fleet Mortgage Corp 450 F3d 745 748 7th Cir 2006 emphasizing the district court s role in overseeing proposed class settlements in order to ensure that class counsel has no con icts of interests with the class members 7A CHARLES ALAN WRIGHT ET AL FEDERAL PRACTICE AND PROCEDURE 1761769 3d ed 2005 compiling case law on what constitutes coextensive antagonistic and con icting interests between class representatives and the class 2009 Rethinking Adequacy of Representation 1155 Windsor81 the Court held that in settling the claims of victims of the 39 f 39 39 39 class 1 39 with present claims against the defendants could not adequately represent class members whose claims had not yet maturediat least when the settlement that the class representatives were advocating failed to include terms as favorable for future claimants as those that the present claimants received82 Nor could those representatives agree to settle the valuable consortium claims of some class members for nothing as the settlement inAmchem did8 The development of the adequacy doctrine from Hansberry through Amchem can be critiqued on a number of grounds The rst is its failure to develop a clear test for incompetence84 or to suggest how that test might be linked to the test for indifference85 In determining competence courts usu ally examine questions of physical and nancial capacityg ilogical enough 81 521 US 591 1997 Without extended discussion the Court has also recognized the principle of adequate representation in a few other cases See e g Philli s Petroleum Co v Shutts 472 US 797 812 1985 stating that due process requires that the plaintiff adequately represent the class members interests Falcon 457 US at 157 n13 mentioning the adequacyof representation requirement that ensures that class representatives have no con icts of interest 82 Arnchem Prods Inc v Windsor 521 US 591 626727 1997 Amehem also identi ed the array of illnesses and medical conditions of the class members as another reason to doubt the adequacy of representation 1 In addition Amehem involved claims of collusion between class counsel and defense counsel to sell out the interesw of absent class members See Georgine v Arnchern Prods Inc 157 FRD 246 306 ED Pa 1994 mem vacated 83 F3d 610 3d Cir 1996 a d rub nom Arnchern Prods Inc v Windsor 521 US 591 1997 nding that claims that the class action was the product of collusion ie that Class Counsel sold out the interests of the class members Were not supported by the evidence Koniak rupra note 2 at 1118 criticizing Georgine s collusion standard as so high that it Virtually guarantees a nding of no collusion The district court found that such collusion did not exist Georgine 157 FRD at 305710 Neither the court of appeals nor the Supreme Court reached the question 83 521 US at 627 84 In addition to using Rules 23a4 and g to determine questions of indifference to class me ers interests courts use these rules to examine the question of capacity Indeed some courts interpret Rule 23a3 as the place to explore questions of con ict or collusion and Rule 23a4 as the place to examine the question of the capacity of the class representative to represent the class See eg In re Am Med Sys Inc 75 F3d 1069 1082783 6th Cir 1996 using Rule 23a3 to evaluate Whether the class representative s interesw Were aligned with the class and using Rule 23a4 to evaluate Whether the class representative had the mental capacity to represent the class 39kewise the criteria for class counsel outlined in Rule 231A principally explore counsel s nancial experiential and legal capacity to represent the class The Supreme Court has lumped questions of competence and questions of con ict of interest into Rule 23a4 Without any attempt to explain their connection Amehem 521 US at 626 n2039 Falcon 457 US at 157 n13 86 On the physical and mental competence ofclass representatives seeAm Med Sys 75 F3d at 108339 and Murray v New Cingular Wireless Servs Inc 232 FRD 295 2997300 ND 111 2005 Courts have tended to nd that the nancial capacity of class representatives is irrelevant See In re Intel Corp Microprocessor Antitrust Litig 526 F Supp 2d 461 464 D Del 2007 The nancial status of class representatives is irrelevant to class certi cation issues and not courts do focus on the nancial resources of counsel See FED R CIv P 23g1Aiv stating that in appointing class counsel the court must consider the resources the counsel will commit to the representation Doe v Karadzic 176 FRD 458 462 SDNY 1997 determining that counsel was quali ed to represent the class based on credentials and adequate resources 1156 Texas Law Review Vol 871137 requirements but ones that are hard to tease out of a doctrine concerned with con icts and collusion That disconnection is itself a small point But it feeds into two larger problems in the progression from Hansberry to Amchem The rst is the movement from dichotomous to polycentric interests In Hansberry there were essentially only two possible positions that class members might have wished to take either the covenant was valid and therefore enforceable or the covenant was invalid and therefore unenforceable In a world with such dichotomous choices it is easy to recognize con icts of interest InAmchem however the interests were far more complex and diffuse The factual and legal positions of class members varied considerably and class members had a range of possible interests other than the dichotomous poles of I favor set tlement and I favor no settlement Hansberry s identityofinterests test works best when the interests in litigation break into readily opposing clear cut camps Amchem shows that interests are often shades of grey Because it involved only two dichotomous positions Hansberry never needed to specify exactly how tightly aligned the interests had to be in order for a class repre sentative to be regarded as adequate Amchem might have done so but the majority ducked the issue87 So we do not know whether a representative can stand in only for those claimants whose interests are exactly the same shade of grey or if not how close the shades of grey must be Hansberry s test for adequacy seems poorly suited for a world that involves a multiplicity of in terests among class members Second and relatedly in the vocabulary of ethics the class action is a consequentialistispeci cally a utilitarianidevice which is principally concerned with preventing certain harms to potential class members to the defendant or to society88 A doctrine requiring avoidance of con icts of interest or collusion has a deontological ring to it it is a dutybased requirement that must be satis ed regardless of the consequences In Hansberry it was not clear that adequate representation was a deontological principle On one view Hansberry constitutionalized adequate represen tation to achieve a social good it allowed an attack on a racially restrictive covenant to go forward The petitioners in Hansberry had asked the Supreme Court to declare all racially restrictive covenants invalid making the very arguments against restrictive covenants that the Court would adopt eight years later in Shelley V Kraemer89 In 1940 the Supreme Court was 87 At one point Amchem appeared to suggest that the settlement could have been saved if subclasses composed ofmembeIs with comparable interesw had been certi ed instead ofone large class that threw together people with varying interests 521 US at 627 But this suggestion came only in the Court s quotation of a Second Circuit opinion and in any event the Court did not make clear how many subclassesior With What array of intereswiwould have been acceptable 88 See 5147M note 47 and accompanying text 89 334 Us 1 1948 2009 Rethinking Adequacy of Representation 1157 not yet willing to go that far90 adequacy of representation thus became a convenient vehicle that gave the H ansberry petitioners the chance to contest a particular covenant without the Court embroiling itself in far trickier con stitutional and political questions whose outcome would have been in considerable doubt9 By the time of Amchem however any sense that adequate representation was a utilitarian doctrine crafted with an eye toward achieving a good outcome was gone The majority s opinion both opened and closed with a lament about the social and judicial ills that asbestos litigation had caused92 It recognized that the Amchem settlement might have alleviated those ills in some signi cant measure93 Despite these bene ts however the Court felt constrained to nd a lack of adequate representation without weighing the bene ts of settlement against the costs of less than ideal representation947clearly a nonconsequentialist approach The point of this critique is not to catch the Court in a bit of philosophical incoherence Rather it is to show that the doctrine of adequate representationiat least if it is understood to require strict avoidance of con icts of interest or collusionihas drifted from the moorings of the law to which it was attached Class actions are designed to prevent harm to simi larly situated claimants to defendants or to society Class actions also impose costs including two costsidepressed judgment or settlement val ues for class members and a concomitant loss in optimal deterrence of the defendantg ithat can occur when con icts of interest or collusion make representation inadequate Viewed consequentially representation should be deemed inadequate only when the marginal cost of a more imperfect 90 One ofthe Court s dif culties was that in the recent past it had dismissed an appeal of a case challenging the constitutionality and legality of racially restrictive covenants for Want of a substantial federal question Corrigan v Buckley 271 US 323 331732 1926 91 For this interpretation of Hanrberry see YEAZELL 5147M note 63 at 235736 92 Amehem 521 US at 597799 6229 93 1d at 628729 see id at 629 Breyer J dissenting The need for settlement in this mass tort case with hundreds of thousands of lawsuiw is greater than the Court s opinion suggesw 94 This turn seems particularly out of place because Hanrberry v Lee located the adequacyof representation doctrine in the Due Process Clause 311 US 32 45 1940 see also id at 42 stating that the due process and full faith and credit clauses shape the doctrine Today due process is mainly regarded as a consequentialist doctrine balancing the costs of greater procedural protections against their bene w See Mathews v Eldridge 424 US 319 334735 1976 identifying three factors the Court considers When determining Whether a government action is in harmony With procedural due process 1 the private interest that will be affected by the state action39 2 the effectiveness of the proposed procedural requiremenw in safeguarding against due process deprivations39 and 3 the burdens such procedural requirements Would place upon the government For further discussion see infra notes 193794 and accompanying text 95 One example is the potential cost of inaccuracy due to an increased probability of recovery from class aggregation See 5147M note 2 On the deterrence effect of class actions see David Rosenberg Class Actions for Mars T ortr Doing Individual irtiee by Collective Means 62 IND LJ 561 570 1987 which explains tha adhering to a disaggregative disputeresolution system With regard to mass torts reduces the deterrence effect that threatened liability normally has on defendants 1158 Texas Law Review Vol 871137 representation when added to the other costs of class treatment exceeds the costs to similarly situated claimants to the defendant or to society that non class litigation would impose But this is not the inquiry in which Amchem engages Finally treating adequate representation as an absolute bar to class treatment ignores a critical fact Con icts of interest are not occasional oc currences involving a shady class counsel or two Rather as I describe in the next Part con icts of interest are built into the very fabric of our present classaction regime If we are serious about enforcing as tight an alignment of interests as Hansberry and Amchem seem to require we must abandon Rule 23 or rewrite it II Adequacy s Conundrum The Inevitability of Con icts of Interest in American Class Actions The four circumstances in which Rule 23b permits class treatment almost invariably bring into a single class people with antagonistic interests This Part details the reasons for this perhaps surprising conclusion In brief the four classaction scenarios described in Rule 23b seek to prevent harms to other claimants Rules 23blA and to some extent 23b2 to de fendants Rules 23blB and to some extent 23b2 or to society Rule 23b3 To minimize these harms people with diverging interests must be placed sidebyside in the class and those interests must be adjusted one against the other The observation that con icts inhere in many class actions is hardly new98 This Part however is the rst systematic effort to prove why that observation is correct In doing so this proof raises the disconcerting possi bility that virtually all class actions exceed the due process strictures that Hansberry imposes on adequate representation and are therefore unconstitu tional 97 Had Amchem undertaken such an inquiry it is not clear What the outcome Would have been The settlement contained complex provisions that tended to set awards around the historical averages for asbestos settlemenw but also tended to suppress highend awards and made no allowance for in ation thus over time suppressing all awards beneath realdollar historical averages There is some reason to believe that the Willingness of class counsel to accept a low settlement was related to the arguable con icts of interest that they had both in simultaneously representing individual claimants and class claimanw and in simultaneously representing present class claimanw and iture class claimants For a full description ofthe settlement s terms see JAY TIDMARSH FED JUDICIAL CTR MASS TORT SETTLEMENT CLASS ACTIONS FIVE CASE STUDIES 51754 1998 avaikrble at httpWWW Ho quot n Hookup Iquot quot39 Iidmai h pdf 9 See eg Silver amp Baker rupra note 10 at 1468 Con icw of interest and associated tmdeoffs among plaintiffs are an unavoidable part of all group lawsuits and all group settlements 2009 Rethinking Adequacy of Representation 1159 A Con icts ofInterest when Nonclass Treatment Will Harm Absent Class Members Rule 23b1B analRule 23b2 Classes Begin with the problem of harm to the absent class membersithat their interests will be disposed of or at least substantially impaired as a practical matter in the absence of class certi cation The two paradigms for this type of harm are a case seeking a remedy such as a declaration of rights or an injunction and a case involving a limited fund In the former if the defendant s conduct threatens widespread future harm a court often cannot readily con ne the remedy just to the plaintiff100 thus the rst plaintiff to secure a declaration or injunction effectively makes it difficult for similarly situated claimants to obtain relief more suited to their interests In the latter because the fund is insuf cient to satisfy all claimants fully early ling plaintiffs receive full value for their claims leaving little or no money for equally deserving later litigants In both situations blB and b2 class actions promise equitable treatment for all members of the class101 By de nition however the selfinterested plaintiff could care less about equitable treatment She is interested in getting as much of the pie for herself as possible she is under no obligation tomiand therefore will notiseek class treatment unless the class action helps her achieve her goals It is there fore tempting to dismiss the problem of selfinterested class representatives in this context presumably the only class representatives who will bring such cases as class actions must care about equity among claimants and therefore as long as they are competent they will be adequate representatives Such a view however is badly mistaken for sometimes certi cation of a blB or b2 class is an advantage for a selfinterested class representative The reason that a selfinterested plaintiff will wish to bring a declaratory or injunctive claim as a class action is that as class representative she gets to control the arguments about the nature of the remedy to tailor the remedy to her own interests and bind other potential litigants that might have preferred a different remedy to the judgmentithus preventing them from engaging in subsequent litigation that might undermine her preferred remedy The reasons that a selfinterested plaintiff will seek class treatment in the limitedfund situation or in a situation in which it is unlikely that the plaintiff will get the injunctive tailoring she wants are less evident but they 99 FED R Crv P 23b1B 100 See FED R CIv P 23 advisory committee s note 1966 101 The harm that these rules prevent is the failure of the autonomycentered joinder approach of Rule 20a to provide equitable treatment to potential litiganw Who are not joined Such a harm is not necessarily a social harm To use the limitedfund example deterrence theon is indifferent as to Whether the fund is given to one person or one thousand in either evenL the defendant will be equally deterred See David Rosenberg Decoupling Deterrence and Compensation Functions in Mass Tort Class Actionsor Future Loss 88 VA L REV 1871 1892 2002 How damages are distributed among plaintiffs is generally 39 elevant to achieving deterrence 102 See supra text accompanying notes 57761 1160 Texas Law Review Vol 871137 exist To use a limitedfund hypothetical assume that the defendant has control of 1 million in assets the legitimate claims of 100 plaintiffs against this fund amount to 2 million and each plaintiff has an identical claim for 20000 If the rst plaintiff sues individually she will recover the full value of her claimi20000 The same will be true of the next fortynine plaintiffs But at that point the fund dries up and as a practical matter the claims of those last fty potential plaintiffs are worthless If the rst plaintiff brings a class action however she will get only 100007a loss of 10000 that would seem to prevent selfinterested plaintiffs from seeking class treatment103 But not always In four scenarios a selfinterested plaintiff will seek class certi cation 39 Scenario One The increase in the chance Of success plus the ability to spread costs and attorneys fees makes class treatment worthwhile For instance suppose that the plaintiff stands a 40 chance Of winning 20000 in an individual suit and it will cost her 7000 in fees and costs if she wins and nothing if she loses The expected value Of her suit is 5200 Assume that with class treatment however the Odds Of victory go up to 75104 and that the plaintiffs share Of the fees and costs which can now be spread among all 100 class members falls to 3000105 if there is a victory and noth ing if she loses Now the selfinterested plaintiffs expected recovery is 5250 and she will seek class treatment 103 The defendant is also unlikely to seek class certi cation because the defendant is likely to be indifferent about Who receives the 1 million and probably prefers to stave off the day of bankruptcy or asset depletion as long as possible 104 See swra note 57 and accompanying text 105 Although the 3000 gure for litigation costs might seem high class actions o en involve expensesisuch as the time spent discovering and brie ng the classcerti cation motion and the cost of notifying the class in the event of a settlementithat Would not be incurred in individual litigation See FED R CIv P 23e1 requiring an attempt to notify class members that will be bound by the settlement WILLGING ET AL supra note 51 at 68769 noting that the median att fee in class actions was 27730 As the perplaintiff costs fall the incentive of the selfinterested plaintiff to seek class certi cation grows 106 Class actions allow a class representative to reduce the risk of exposure to litigation costs in one particular fashion Although the rule is o en honored in the breach traditional ethical theory made a litigant responsible for payment of litigation expenses the attorney cannot bear those costs MODEL CODE OF PROF L RESPONSIBILITY DR 5103B 1988 But see MODEL RULES OF PROF L CONDUCT R 18e1 2008 permitting a lawyer to make the repayment of costs contingent on the outcome of the case In class actions however a number of jurisdictions have held that the class representative is not responsible for the full costs of litigation See Rand v Monsanto Co 926 F2d 596 600701 7th Cir 1991 refusing to apply DR 5103B in a federal class action and refusing to nd that the class representative s unwillingness to bear all the expenses of litigation made the representative inadequate under Rule 23a4 See generally Geoffrey P Miller Payment of Ewenses in Securities Class Actions Ethical Dilemmas Class Counsel and Congressional Intent 22 REV LITIG 557 2003 analyzing ethical and Rule 23 issues concerning lawyers that advance the costs of litigation Therefore in the minority of jurisdictions that adhere to DR 5103B for individual lawsuiw the legal exposure of the class representative for the cosw of litigation is theoretically less 2009 Rethinking Adequacy of Representation 1161 39 Scenario Two The claimants do not have identical remedial claims The selfinterested class representative might hope that after using the class s number to help establish liability she can effectively denigrate or devalue the claims of fellow class members thus getting a larger share of the judgment For instance assume that class treatment raises the chance of recovery only to 70 but the class representative expects to be able to shade the remedial proof to enhance her claim to 12000 Still assuming pro rata litigation costs of 3000 her ex pected recovery is 6300 so she will seek class certification 39 Scenario Three The selfinterested plaintiffs preferred counsel agrees to take the case only as a class action so that class treatment becomes the only viable way to bring suit For instance using the numbers described in the first example the plaintiff might expect that retaining the preferred counsel will increase the chance of winning from 40 to 80 On these numbers it is rational for the class repre sentative to assent to a class action 39 Scenario Four The putative class counsel with an eye only on the fee award advises the putative class representative to seek class status without advising her that she stands to lose money from class treatmentiand the putative representative lacks the legal acumen to realize that class treatment is not in her best interests Whichever reason is at work class treatment ends up bundling together plaintiffs Whose interests are not aligned The class representative and the members of the class are locked in a competition for a limited resourcei whether an injunction that cannot be perfectly tailored to all their interests or a fund that is insuf cient to satisfy fully all their claims The interests of the class representative class counsel and class members might converge on certain issuesiin particular on the issue of the defendant s liability107 On the issue of remedy however class representatives and class members who are competing with each other for a resource that cannot fully satisfy all claimants lack an identity of interests Thus there is reason to doubt that the selfinterested class representative who wants the relief shaped as fa vorably to her interests as possible will adequately represent the interests of those with different interests True enough but a doubting Thomas might point to two situations in which this selfinterest will not manifest itself The rst occurs when the class members do not disagree about either the theory of liability or the na ture of the relief they seek For example under the relevant law the choice might be either injunctionX or no injunction every potential plaintiff wishes to obtain exactly the same remedy which will apply to and equally bene t 107 But not always To the extent that the nature of the defendant s liability determines the shape of the relief plaintiffs interested in different relief might not agree on which theory of liability to pursue 1162 Texas Law Review Vol 871137 all108 Here our Thomas might rejoin the rising tide of the plaintiff s self interested desire to get injunctionX really does lift all class members boats Even in this situation however con ict exists In this example the only rea son that a selfinterested putative class representative would seek class certi cation is to of oad some of the costs of litigation onto class members Although it is dif cult to have much sympathy for class members who are hoping to be free riders on an individual suit the selfinterest of class membersia selfinterest that I have not discussed before but one that exists every bit as much as the selfinterest of the class representativeiis not to certify the case for class members will be required to pay a pro rata share of litigation expenses for an injunction that they otherwise would have obtained for free We can and do ignore the freerider problem in blB and b2 cases but ignoring it does not mean that the antagonism of interests goes away 09 The second situation a doubting Thomas might raise involves the use of subclasses which Amchem has suggested as a solution to the polycentric in terests of class members110 The idea of subclasses is to subdivide plaintiffs 108 It is not clear how many cases this hypothetical encompasses For the sake of argument I am Willing to admit that some cases fall Within this description 109 Because putative class members cannot opt out of blB and b2 class actions see rupra note 54 the freerider problem cannot be assuaged by a1 owing class members 0 exi 39 interesting to note that the con ict of interest here does not concern the substance of the claim but rather the litigation strategy Whether to seek class certi cation Neither Hamberry nor Amchem involved a disagreement over litigation strategy nor has the Court ever held that disagreements over strategy are a suf cient reason for nding a con ict of interest Indeed it is dif cult to imagine that it Would for then no class action could be certi ed when any class member objected to certi cation What makes this situation different from a simple disagreement over strategy however is the reason for the disagreement Class members Wish to see the class not certi ed because they will obtain a better outcome ie the same injunction at less expense Without certi cation Conversely the class representative is making herself better off by making class members Worse off In both Hanrberry and Amchem comparable disagreements over the remedial outcome Were suf cient to nd a con ict of interest The one situation in which no antagonism appears to exist occurs when it is too costly for any claimant to bring the injunctive claim on her own In such a caseithe injunctive equivalent of the negativevalue suit discussed infra in the text following note 1247it appears to be in every class member s interest to join the class Nonetheless as the discussion of negativevalue suits will show internal con icw can arise in this situation Moreover unless the expected value of the injunction is very close to the cost of prosecuting the claim so that the claim becomes viable only when litigation 0053 are spread across every member of the class the freerider problem still exisw An absent class member Would prefer for the class de nition to be broad enough to spread the litigation costs among enough people to make the class action viable but narrow enough to exclude her It is also Worth noting that determining a lack of con ict by calculating the net effect of a class action on the interesw of the class members is a consequentialist approach to determining con icts of interestiprecisely the approach that Amchem s deontological analysis eschewed See Arnchem Prods Inc v Windsor 521 Us 591 621 1997 The standards set for the protection of absent class members serve to inhibit appmisals of the chancellor s foot kindiclass certi cations dependent upon the court s gestalt judgment or overarching impression of the settlement s fairness 110 Amchem 521 Us at 62739 see FED R CIv P 23c5 When appropriate a class may be divided into subclasses that are each treated as a class under 39s e 39 see rupra note 87 and accompanying text Amchem s suggestion was mild A er noting that class representatives served 2009 Rethinking Adequacy of Representation 1163 into smaller groups each of which shares an identity of interests Although useful in theory subclassing is far less helpful in practice for two reasons First each subclass must be large enough not to run afoul of the numerosity requirement111 but still contain within it no remedial antagonism among the members Although it is possible to hypothesize such situations112 they are rare in the real world Second subclassing along interest lines institutional izes the con ict among competing interests rather than eliminating it Because subclasses are still part of a larger single class the con icts among class members remain Third although separate classes might overcome this problem it is tricky to imagine how a court could engineer the lingiand consolidation into a single litigationiof separate class actions each of which represents distinct con icting interests Separate classes or subclasses require multiple class representatives and multiple class counsel But separate classes or sub classes undercut the incentives for selfinterested class representatives and class counsel to seek certi cation Assuming that willing representatives for multiple classes or subclasses are available and this is hardly a given mul tiple classes loosen the selfinterested class representative s control of the litigation and her ability to steer the litigation in her favor thus reducing her expected recovery from class treatment multiple representatives further re duce the number of people over whom the costs of litigation can be spread thus increasing the pro rata costs In the example above if separate classing or subclassing reduces the expected recovery from 75 to 65 and in creases perperson litigation expenses to 500 the expected recovery from class treatment falls to 60007less than the 6500 that a selfinterested plaintiff might expect from individual treatment Similarly assuming that multiple willing class counsel are available a selfinterested lawyer will re alize that successfully settling the case becomes harder with more classes and the fee that the counsel can expect will be substantially less than she could expect in a scenario in which she was the sole lawyer for a larger class genemlly as representative for the Whole not for a separate constituency it quoted a Second Circuit decision that suggested subclassing as a solution to the problem of adverse interesw Within a settlement class Amchem 521 US at 627 discussing In re Joint E amp S Dist Asbestos Litig 982 F2d 721 74243 2d Cir 1992 modi ed on reh g rub mm In re Findley 993 F2d 7 2d Cir 1993 The Court never endorsed subclassing directly 111 FED R CIv P 23a1 In geneml a class of 100 or more members meets this requirement even smaller numbers can sometimes be satisfactory See eg Robidoux v Celani 987 F2d 931 935736 2d Cir 1993 permitting inexact numbers ofa potential class size to satisfy the numerosity requirement WRIGHT ET AL rupra note 80 1762 emphasizing that there are no arbitrary rules establishing a required class size and there only needs to be a showing that joining all the members is impmcticable 112 For example in the limitedfund hypothetical discussed rqpra in note 103 and accompanying text rather than individual claimants each entity with a 20000 claim could be an unincorporated association or trust composed of thousands of members On the further assumption that the members of each association have no legally cognizable internal con icw about the proper distribution ofiw 20000 claim subclasses or sepamte classes composed ofthe members of each association would be numerous enough and also would not be remedially con icted 1164 Texas Law Review Vol 871137 The class action also loses some of its ef ciency due to the cost of multiple representation113 Once separate classes or subclasses are introduced the litigation calculus changes the advantages of individual action become greater and the odds that the selfinterested class representative and class counsel will seek class certi cation falls Unsurprisingly separate classes and subclasses are very uncommon in practice Therefore except in those rare cases in which subclassing into smaller and utterly cohesive groups is a viable option con icts of interest inhere in blB or b2 classes These con icts are less nettlesome if we assume that the class representative and class counsel are virtuous principled altruistic or else are committed to maximizing the common goodiand in addition that they are competent enough to achieve their goal But the law of adequate representation cannot afford to make that assumption given the reality that selfinterested class representatives and class counsel can also use class actions to achieve private advantage Moreover even sel ess class rep resentatives and class counsel do not eliminate con icts within the class the con icts exist ever tempting the virtuous the upright and the altruistic to cave into abject selfinterest If we read Hansberry and Amchem strictly so as to require an identity ofinterests approach to adequate representation the unconstitutionality of the blB and b2 class actions in nearly every context is a matter of elementary logic The only remarkable thing is that the issue has not been widely noticed in the past Con icts ofInterest when Nonclass Treatment Will Harm the Defendant Rule 23b1A andRule 23b2 Classes Next consider the situation in which the harm that class treatment alleviates would befall the defendant Rules 23blA and 23b2 are the texts for analysis the former authorizes a class action when separate actions by a group of plaintiffs create a risk of inconsistent or varying 113 See Reynolds v Bene cial Nat l Bank 288 F3d 277 282 7th Cir 2002 holding that subclassing was not required despite a con ict of interest Within the class because of the di culty and expense of creating appropriate subclasses 114 See WILLGING ET AL supra note 51 at 41744 nding no use of issue classes and little use of subclasses Within the four data sew A hybrid solution o en adopted by class counsel in lieu of subclassing is to constitute a single class with multiple class representatives each of Whom represents a particular type ofinjury or claim In this Way a single counsel can try to represent all the various permutations of the claim injury and circumstance But instantiating in particular people the con icw among class members does not change the fact that con icts Within the class exist See Amchem 521 Us at 627 Although the named parties alleged a mnge of complaints each served generally as representative for the Whole not for a separate constituency 115 Courts have noticed other constitutional issues with either blB or b2 class actions including the arguable due process violation in failing to provide an optout Ii 39 39 Petroleum Co v Shutts 472 Us 797 811712 amp n3 1985 and Seventh Amendment issues in adjudicating injunctive claims When class members might also have monetary claims see Allison v Citgo Petroleum Corp 151 F3d 402 405 5th Cir 1998 2009 Rethinking Adequacy of Representation 1165 adjudications that would establish incompatible standards of conduct for the defendant while the latter permits class treatment when the defendant has acted in a way that makes nal injunctive relief appropriate 117 This language invokes two paradigmatic cases of harm The rst paradigm involves an injunction situation in which one claimant with one set of inter ests wishes to obtain an injunction requiring the defendant to do X while the interests of another claimantiwho as a nonparty cannot be bound to the judgment in the rst caseiwishes to obtain an injunction requiring the de fendant to do Y The interests of other claimants might lead them to seek an injunction requiring Z If X Y and Z are inconsistent with each other so that it is very costly or even impossible for the defendant to meet all three obliga tions simultaneously and if the plaintiffs are numerous enough class treatment seems appropriate 8 The second paradigm involves an interpleaderlike situation with numerous claimants Assume that 100 people claim an interest in a res that the defendant is holding and that each has a legal claim superior to that of the defendant If individual actions are led the rst plaintiff to judgment will obtain a judgment that the res belongs to him The second ling plain tiff is not bound by that judgment and thus is free to obtain a judgment that the defendant owes her the res or more accurately because the defendant gave the res to the rst plaintiff the defendant owes monetary equivalent of the res due to the defendant s conversion of the res And the same is true for the third plaintiff and the fourth right on to the hundredth In neither of these paradigms does it necessarily appear to be in the interests of the egoist plaintiff to seek class certi cation the problems the defendant has in meeting other plaintiffs demands are not her business as long as the defendant can give her the remedy she wants There are however a number of situations in which the egoist plaintiff will seek certi cation These situations largely parallel those described above 116 FED R CIv P 23b1A39 cf 28 USC 1335 2000 statutory interpleader FED R CIv P 19a1Bii mandatory joinder When the defendant is subject to a substantial risk of incurring double multiple or otherwise inconsistent obligations FED R CIv P 22 rule interpleader 117 FED R Crv P 23b2 118 Of course this situation is nothing more than the ip side of the injunctive situation involving the b1B and b2 class actions described rwra in subpart 11A There the rst to 39 39 39 ction was in pmctical effect able to prevent later plaintiffs from obtaining an injunction that suited their needs39 the absent plaintiffs were therefore the harmed parties In this contexg the later plaintiffs are not so prevented thus the harmed party is the defendang Who must comply with con icting requirements One factor determining Whether the former or the latter harm is per nent is likely to be the viability of independent suits If enough is at stake that multiple claimanw have an incentive to sue then the latter harm is more likely to occur Another determinant is tempoml dispersion If the claims of some litiganw have not yet ripened when the early claims mature the former harm is more likely to occur 119 See rwra notes 104707 and accompanying text 1166 Texas Law Review Vol 871137 39 Scenario One Laterfiled suits seeking injunction Y or injunction Z threaten the ability of the defendant to provide the first plaintiff with the injunctionX that she seeks or threaten to undo the injunction 39 Scenario Two A class action increases the chances of winning or spreads the class representative s cost of litigation across the class or both and these expected advantages outweigh any loss in the quality of the remedy that the plaintiff would have achieved in individual liti gatlon 39 Scenario Three By taking control of the entire litigation the self interested plaintiff steers the case toward her preferred relief For instance the plaintiff might believe her claim to injunctionX or to the res is better than that of other potential plaintiffs A class action un der b1A or b2 becomes a way to spread the costs of litigation among class members as well as a way to obtain a clear entitlement to injunctionX or to secure clear title to the res that the competing claims of other class members might undo 39 Scenario Four The only way to attract a lawyer who will increase the chances of victory is to dangle the lure of the recovery of class action fees the increased chances of recovery exceed any potential loss in the quality of an individual remedy 39 Scenario Five Tantalized by the promise of larger class fees class counsel misleads the putative class representative into believing that class treatment will lead on balance to a better remedy even if it will not In addition another scenario is possible in the b1A and b2 situations A selfinterested defendant could seek or consent to class certi cation to avoid the risk of multiple or inconsistent liability120 As with the b1B and b2 classes the class now contains members that have competing interests Indeed by de nition the members of the class wish to subject the defendant to inconsistent or varying law suits and incompatible remedies Some of the class members have an interest in achieving one remedy and others in achieving another remedy Although in limited circumstances constituting separate classes according to group interests might provide an escape from the conundrum of con icting 120 Although requests by defendanw to certify class actions against them are in theory possible see Rossetto v Pabst Brewing Co 71 F Supp 2d 913 917 ED Wis 1999 rev 11 on other groundx 217 F3d 539 7th Cir 2000 they are as rare as hens teeth More typically the defendant is likely to negotiate a settlement with a putative class representative and class counsel and then support the plaintiffs request for class certi cation See e g Ortiz v Fibreboard Corp 527 Us 815 822726 1999 noting a defendant s attempt to reach a global settlement before supporting class certi cation 2009 Rethinking Adequacy of Representation 1167 class interests as a practical matter that solution is unlikely to be effective for the reasons already explained Therefore the blA and b2 harm to defendants class actions contain the same constitutional in rmity as the blB and b2 harm to absent class members class actions If the Due Process Clause in fact re quires an identity of interests among class members a court cannot certify a blB or b2 defendantharm class action C Con icts of Interest when a Class Action Is the Superior Aggregation Mechanism Rule 23b3 Classes Unlike the bl and b2 class actions the b3 class action is not designed speci cally to prevent harm to absent plaintiffs or to the defendant The b3 class action applies principally to monetary claims plaintiffs with injunctive claims will use Rules 23bl and 23b2122 The assumption underlying the b3 class action is that the defendant has suf cient assets to satisfy putative class members monetary claims123 Unlike a limitedfund or interpleadertype situation serial suits by individual plaintiffs will not leave later ling plaintiffs without adequate monetary remedies Nor will a series of such suits leave the defendant eXposed to multiple or inconsistent obliga tions within the meaning of Rule 23blA as courts have long recognized inconsistent monetary judgmentsisome of which order a defen dant to pay damages to some plaintiffs and others of which nd the defendant not liable to other plaintiffs for the same behaviorido not consti tute a harm to the defendant within the meaning of this rule124 Instead the focus of Rule 23b3 is a more diffuse harm to society as a whole Two types of social harm are the central cases The rst is inade quate deterrence The paradigmatic case is largescale smallstakes litigation also known as negativevalue suits Assume that a creditcard company has illegally overcharged ten million customers 2 apiece It is unlikely that very many if any individual cases will be led the costs of litigating each case exceeds the eXpected recovery thus giving the suit a negative net value and no attorney will work for such a small potential 121 See swra notes 110714 and accompanying text 122 In limited circumstances a court can award monetary relief incidental to an injunctive claim in a b2 class action Courts are presently divided over how incidental the relief must be but under no construction can Rule 23b2 be used When the case is principally about monetary recovery Compare Allison v Citgo Petroleum Corp 151 F3d 402 415 5th Cir 1998 narrowly construing the monetary relief available in b2 suits with Robinson v MetroNorth Commuter RR 267 F3d 147 157 2d Cir 2001 rejectingAllison s approach 123 Cf Ortiz 527 Us at 859760 reversing certi cation ofa blB settlement class action When the defendant retained some asses thus making the action unsusceptible to limitedfund treatment 4 See In re Agent Orange Prod Liab Litig 506 F Supp 762 789 EDNY 1980 Rule 23b1A is not meant to apply Where the risk of inconsistent results in individual actions is merely the possibility that the defendants will prevail in some cases and not in others thereby paying damages to some claimanw and not others 1168 Texas Law Review Vol 871137 recovery But this failure to deter the creditcard company has a signi cant social cost By aggregating all ten million cases and by spreading the costs of litigation across all the claims the suit becomes economically viable a lawyer will now be willing to handle the case in return for a fee based on the class s recovery and society achieves a better level of deterrence The second central case for the b3 class action involves excessive litigation costs125 Here the paradigmatic case is largescale largestakes litigation in which the expected net recoveries make individual lawsuits eco nomically viable Because the cases tend to arise out of a common pattern of conduct by the defendant and tend to involve a limited array of injuries the same issues are litigated in case after case courtroom after courtroom At a certain point this repetitive litigation becomes a socially unnecessary expense126 A class action that brings together all of the claimants promises to reduce these costs as well as the strain on the judiciary substantially127 But b3 status is not always in an individual class member s best interest The recovery on a class claim can be lower128 and slower129 than recovery on an individual claim Class treatment can also be unattractive to 125 Optout b3 class actions impose certain cosw not found in individual litigation such as the o en pricey cost ofgiving notice to class members oftheir right to opt out See FED R CIV P 23c2B delineating the requirements for individual noti cations to class members Therefore 0 excessive litigation cosw I mean net excessive coswithe costs that repetitive individual litigation creates less the costs that b3 litigation imposes 126 There is an argument that a certain amount of repetitive litigation is socially useful According to Professor McGovem s thesis on maturity largescale largestakes cases o en go through cycles from the early cycle in which defendants Win most cases to a cycle When plaintiffs respond to the early defense stmtegies and break through with some signi cant victories before nally reaching a mature equilibrium When the chances of victory can be predicted with some statistical accuracy See Francis E McGovern An Analysis of Adam T ortr for dger 73 TEXAS L REV 1821 1841743 1995 discussing the three phases ofmasstort cases under a maturity theory Arguably the most accurate assessment of the value of cases occurs only a er the equilibrium has been reached Therefore before reaching this equilibrium repetitive litigation is justi ed as long as is marginal cosw are less than the case s marginal contribution to the establishment of a more accurate equilibrium Once an equilibrium is reached however the costs of repetitive litigation cannot be justi ed 127 Although it might seem that the reduction ofthese cosw is an advantage to the parties as Well as to society that is not necessarily the case For instance from a defendant s viewpoint hi h litigation cosw act as a barrier to entry for some plaintiffs As long as the defendant s litigation costs are less than the additional liability costs that the defendant would incur from a lower barrier to entry the defendant will prefer to expend money on litigation cosw In particular a litigation class action typically threatens a liability judgment far in excess of the savings that the defendant incurs in lower litigation costs 128 See Horowitz amp Bordens Aggregation rupra note 25 at 226 reporting on experimental resulw showing that a plaintiff with a quite strong case appears to be better served by being disaggregated particularly With reference to punitive damages For data on typical recoveries in class actions see Thomas E Willging amp Shannon R Wheatman Attorney Choice of Forum in Class Action Litigation What Dij renee Doer ItMake 81 NOTRE DAME L REV 591 63amp40 amp tbl15 2006 which provides data showing that in state class actions the median recovery was 850000 and the median per capita recovery was 350 While in federal class actions the median recovery was 300000 and the median per capita recovery was 517 2 See JAMES S KAKALIK ET AL DISCOVERY MANAGEMENT 90 tblA3 1998 noting the positive correlation between time to disposition and class certi cation 2009 Rethinking Adequacy of Representation 1169 counsel The nancial and resource requirements are considerable pricing many counsel out of the market130 classaction law is a highly specialized eld beyond the ken or competence of many lawyers131 and the lawyer might lose control of the case to another counsel who ultimately garners the big fees132 In addition since the mid1990s federal courts have been less hospitable to b3 class actions especially in the largescale largestakes context133 therefore class treatment is hardly a given and might fruitlessly add cost and delay for claimants and counsel alike Nonetheless without a strong independently viable claim a self interested claimant is likely to consider class certi cation for one or more of the reasons that typically motivate selfinterested claimants to seek class certi cation spreading litigation costs increasing the probability of recovery obtaining a litigation premium or luring a more effective lawyer through the promise of a large class fee134 The opportunity to secure a large fee is also likely to be attractive to a selfinterested lawyer and might tempt the lawyer to advise a client to seek class certi cation even if it is not in the client s interest to do so The calculation of selfinterested class representa tives and class counsel is slightly different in b3 cases than in mandatory bl and b2 cases On one hand the likely remedyia fund of moneyi often makes class treatment a more lucrative prospect for class counsel on the other hand the expense of giving notice of class members right to opt out and the consequent chance that optouts will decrease the value of the class s claim and increase the chance of competing class actions that might cost the class representative and class counsel control of the case create risks for the representative and counsel 0 See FED R CIv P 23g1Aiv making the resources that counsel will commit to representing the class an issue in determining the ade uacy of class counsel 131 See FED R CIv P 231Aii making counsel s experience in handling class actions and other complex litigation an issue in determining the adequacy of class counsel 132 Indeed for a While a number of courts auctioned off the position of class counsel to the lowest responsible bidder39 the counsel that brought the case initially received no preferential treatment in classcounsel selection See eg In re Oracle Sec Litig 132 FRD 538 539 ND Cal 1990 justifying the selection of class counsel via competitive bidding by asserting that the bidding process allows assessment of the reasonableness of the fee application by reference to other applications In addition in suits under the Private Securities Litigation Reform Act PSLRA of 1995 Pub L No 10467 109 Stat 737 codi ed at 15 Usc 78u4 2000 the court designates the lead plaintiff Who might not be the plaintiff that initially led the action The lead plaintiff then chooses the class counsel Who might not be the counsel that the original plaintiff chose See In re Cendant Corp Litig 264 F3d 201 222725 3d Cir 2001 rejecting the auction theory in PSLRA cases and placing the lead plaintiff in charge of selecting class counsel 133 See eg Amchem Prods Inc v Windsor 521 Us 591 622 1997 holding that a class in an asbestos case failed to meet the predominance requirement of Rule 23b339 Castano v Am Tobacco Co 84 F3d 734 74L46 5th Cir 1996 overturning class certi cation because the class failed to meet both the predominance and superiority requirements of Rule 23b339 In re Rhone Poulenc Rorer Inc 51 F3d 1293 1304 7th Cir 1995 granting a Writ ofmandamus and ordering decerti cation of a class of masstort claimants 134 See rqpra notes 104707 119 and accompanying text 1170 Texas Law Review Vol 871137 When selfinterested class representatives and selfinterested class counsel seek class status however their interests are not the interests that society hopes to vindicate through the b3 class action135 The class repre sentative seeks to maximize the value of the claim and class counsel seeks to maximize the value of the fee Neither the representative nor the counsel has the goal of achieving optimal deterrence or reducing litigation costs as such According to Hansberry however the critical issue is whether the interests of class representatives align with the interests of others in the class their alignment with society s interests is not the relevant issue Once again however the structure of the b3 class action creates con icts within the class The con ict is evident from the language of Rule 23b3 A court can certify a b3 class action only when questions of law or fact common to class members predominate over any questions affecting only individual members and a class action is superior to other available methods for fairly and efficiently adjudicating the controversy 137 The predominance require ment concedes the existence of noncommon nonpredominant issues in b3 class actions138 An obvious problem is the selfinterested class representative s incentive to litigate and prove noncommon issues beyond the point at which those proofs aid her own case139 Indeed spending even one dime litigating the noncommon issues of class members eats into the net re covery that the class representative can expect140 The problem typically 135 This fact is hardly surprising For an economic analysis of the inef ciencies that can arise When parties use the public good of adjudication to achieve private gain see STEVEN SHAVELL ECONOMIC ANALYSIS OF ACCIDENT LAW 265770 1987 136 Maximizing the value of the fee is not the same as maximizing the value of the class s claim POSNER rupra note 28 2111 at 61L16 The literature o en analyzes the incentives for class counsel to depart from the interests of the class as a type of agency cost See John C Coffee Jr The Regukition of Entrepreneurial Litigation Balancing Faimerr and E iciency in the Large Class Action 54 U CHI L REV 877 883 1987 denominating the con icts of interest between attorneys and clienw that can arise in classaction litigation as an agency cost problem Jonathon R Macey amp Geoffrey P Miller The Plaintijfr Attorney s Role in Clair Action and Derivative Litigation Economic Analysis and Recommendationshr Change 58 U CHI L REV 1 22727 1991 arguing that the lack of monitoring of attorneys by class members and the inef cacy of bonding in class actions create deviations of interesw between attorneys and clienw For a case illustrating how the fee structure chosen by counsel was not as advantageous to the class as other structures might have been see Cendant 264 F3d at 285 137 FED R CIv P 23b3 The rule also provides four speci c criteriaithe interest ofclass members in controlling their own cases the extent of preexisting litigation the Wisdom of centralizing the litigation in one forum and the manageability of the class actionithat help a court to esh out the predominance and superiority criteria FED R CIv P 23b3A7D 138 For the exception to this statement see in a notes 152758 and accompanying text 139 Indeed even on common issues the interests of the class representative and class members might not line up perfectly Given the class representative s particular factual position pressing certain claims or theories of liability might enhance her claim While pressing other claims or theories might better bene t class members that occupy somewhat different litigation postures 140 We would expect to nd that When it becomes too costly for them to prove a class member s claim the class representative and class counsel will abandon the claim he 2009 Rethinking Adequacy of Representation 1171 becomes more acute as the case moves from questions of general liability to the questions speci c to each plaintiff such as individual causation damages and casespeci c defenses that usually inhabit b3 class actions This lack of enthusiasm for proving the noncommon issues of class members is somewhat counterbalanced by the interests of class counsel who has an incentive to maximize the fee and therefore within limits to enhance the value of class members claims But that fact merely highlights a con ict of interest that pertains between the class representative and class counsel Moreover class counsel has an incentive to litigate noncommon issues only to the extent that doing so maximizes the feeiin other words to expend time and money on increasing the size of the monetary recovery only to the point that an additional unit of time and money earns a greater fee than coun sel can earn for other legal work This point is not necessarily the point at which the recovery for either the class representative or the class members is at its maximum Thus counsel s interest does not always align tightly with the interests of either the class representative or the class members The misalignment of interests between the class and its counsel extends beyond the question of fees One of the enduring realities of most b3 class actions is that class counsel advances the funds for the litigation including the often considerable money required to give notice142 Losing a class action can visit nancial ruin on class counsel The combination of fronted costs and expected attorneys fees typically makes class counsel the largest stakeholder in the class action In a largescale smallstakes case the counsel s stake can exceed that of any plaintiff by ve or even six orders of magnitude Even in largescale largestakes cases the disparity can be enormous For instance in the Blood Factor settlement class action143 class development of cy pres and other doctrines for providing substituted remedies bears out the expected result See In re Airline Ticket Comm n Antitrust Litig 307 F3d 679 689 8th Cir 2002 approving cy pres distribution of unclaimed settlement proceeds but modifying the distribution plan Democratic Cent Comm v Wash Metro Area Transit Comm n 84 F3d 451 45L56 DC Cir 1996 describing cy pres and other approaches to distribution of funds When it was too costly to determine the victims of excessive transit charges cf Molski v Gleich 318 F3d 937 95356 9th Cir 2003 rejecting the settlement in a mandatory class action and also rejecting the nding that the class representative and class counsel provided adequate representation Where the representative received 5000 counsel received 50000 class members received nothin and the defendant instead made contributions to thirdparty advocacy groups This costibene t calculus is not the deontological identityofinterest analysis that Hanrberry and Amchem appear to and 141 Seerqpranote 610 and 39 text39ruprate t 39 mu 107 and119 142 Class counsel commonly advances the costs of classaction litigation See 5 ALBA CONTE amp HERBERT B NEWBERG NEWBERG ON CLAss ACTIONS 1521 at 78 4th ed 2002 stating that cost advancemenw on a contingency basis are critical in class actions rupra note 106 an accompanying text This case In re Factor VIII or IX Concentrate Blood Productr Litigation Blood Factor 159 F3d 1016 7th Cir 1998 was a class action for settlement brought by one class representative Susan Walker on behalf of all hemophiliacs infected with HIV that had used the defendant s producw as Well as their infected spouses and children their estates and all persons with derivative claims such as loss of consortium and emotional distress See DEBORAH R HENSLER ET AL CLAss 1172 Texas Law Review Vol 871137 counsel received 40 million for fees and reimbursement of costs while each of the 6500 class members received 100000144 And counsel must deal with competitive pressures from overlapping class actions brought by other lawyers who pose a constant risk of settling the case out from underneath class counsel thus leaving counsel holding the bag of uncompensated costs and time145 Therefore the risk tolerance of the class counsel is often differ ent from that of the class representative and class members In such a circumstance it is understandableieven if not ethically laudableiwhen class counsel acts to protect that investment in the case rather than undertak ing riskier strategies that match up better with the risk positions of the class The superiority inquiry adds to the tension within the class Superiority examines the issue of class certi cation from the viewpoint of society en suring that a class action is a better vehicle for resolving a case than other possible methods such as individual litigation consolidation147 multidistricting148 and so on149 It is likely that some class members would have been better served by one of these alternate methods But none of those methods better serves the interests of the class representative or class counsel if they did the representative or counsel would have employed them to begin with The optout feature of b3 class actions arguably softens these con icting interests It could be argued that class members waive any possible con icts of interest by failing to opt out when afforded the ACTION DILEMMAs PURSUING PUBLIC GOALS FOR PRIVATE GATN 305 2000 describing the class of plaintiffs id at 315 n59 noting that Susan Walker is a ctitious name used to protect the privacy of the actual class representative 144 BloodFaetor 159 F3d at 101839 HENSLER ET AL mpra note 143 at 305707 145 There are cases in which defendants arguably pitted counsel in two overlapping class actions against each other in a reverse auction to drive down the settlement s price See Reyno Bene cial Nat l Bank 288 F3d 277 282783 7th Cir 2002 remanding the case to determine ifa reverse auction occurred Epstein v MCA Inc 126 F3d 1235 1250 9th Cir 1997 Withholding full faith and credit from a related statecourt settlement because the con icts of interest between class counsel in statecourt action and plaintiff class amounted to inadequate representation withdrawn on reh g 179 F3d 641 650 9th Cir 1999 146 Although I do not explore them here these pressures are also a reality in bl and b2 class actions Because those classes are less common and they rarely involve monetary awar s akin in size to b3 awards the degree of con ict between the interesw of the class and the interesw of counsel is o en less Cf John C Coffee Jr Conlien Consent and Allocation A er Amchem Productsion WhyAttomeys Still Need Consent to Give Away Their Clientx Money 84 VA L REV 1541 1542 1544750 1998 demonstrating that serious con icw ofinterest exist at the stage of allocating money among class members 147 See FED R V P 42a 148 See 28 UsC 1407 2000 149 For a full discussion of potential aggregation methods see generally JAY TlDMARsH amp ROGER H TRANGSRUD COMPLEX LITIGATION PROBLEMS 1N ADVANCED CIVIL PROCEDURE 107 200 2002 2009 Rethinking Adequacy of Representation 1173 opportunity to do so 0 But this argument proves too much for it wipes out the doctrine of adequate representation in b3 class actions It puts those who do not opt out at the mercy of selfinterested class representatives and class counsel creating an incentive for rational class members to opt out and frustrating the hopedfor gains from class treatment Indeed treating a fail ure to opt out as a waiver turns the idea of adequate representation on its head Rule 23 s promised tradeoff for giving up the right to bring an indi vidual action is adequate representationinot the absence of adequate representation151 It is possible to specify one albeit uncommon condition in which a class representative lacks a con ict of interest with class members The situation occurs when a class of claimants have a joint entitlement to receive a lumpsum award and the proper distribution of the award among the bene ciaries is not in dispute152 Further assuming that any variations in the factual positions of the claimants create no varying legal positions or theories153 there are no noncommon issues This hypothetical situation is the monetary equivalent of the injunctionX or no injunction situation de scribed in connection with blB and b2 class actions 4 But the b3 class action does not present a comparable freerider con ict between the class representative and the class members The reason is that the b3 class action generates the fund of money from which expenses will be paid had the class representative brought an individual action the common fund would have been charged for these expenses in any event155 Unless the 50 Hamberry v Lee which created the constitutional requirement of adequate representation did not involve an optout class action 311 Us 32 39744 1940 151 See Phillips Petroleum Co v Shutts 472 Us 797 810 1985 Unlike a defendant in a normal civil suit an absent classaction plaintiff is not required to do anything He may sit back and allow the litigation to run its course content in knowing that there are safeguards provided for his protection In addition the Waiver argument fails to account for the possibility that even if representation is adequate at the time that the optout right is provided subsequent evens could render the class representation inadequate See id at 812 The Due Process Clause of course requires that the named plaintiff at all times adequately represent the interests of the absent class members of FED R CIv P 23e4 permitting but not requiring a court to give a second opt outright at the time of settlement 152 For instance the claimants might be the numerous bene ciaries of a trust or the members of a corpomtion or unincorporated association suing on behalf of the trusg corpomtion or association because of an action that injured the trust or corporation not just the interests of some bene ciaries of shareholders Cf FED R CIv P 2317232 derivative actions and actions by unincorporated associations 153 For example in a case brought by shareholders against a corpomtion the actions of the of cers or the board of directors might be called into question if the of cers or board also own shares the class s con icting positions take this situation ouwide of the narrow exception that I am describing 154 See rwra notes 108709 and accompanying text 155 See Bloomer v Liberty Mut Ins Co 445 Us 74 88 n15 1980 acknowledging the established power of a court of equity to charge bene ciaries with a proportionate share of the costs of creating a common fund through litigation 1174 Texas Law Review Vol 871137 additional costs occasioned by class treatmentm exceed the expected bene ts including the greater likelihood of recovery of class treatment for a par ticular class member 7 no freerider problem exists Cases of this description are rare and it would be even rarer for a claimant or counsel to choose to incur the expense and uncertainty associated with seeking class treatment when the claimant can sue for and recover the same award without encountering such dif culties158 Because this example contains an important insight into the conundrum of adequate representation I return to it later 9 For now however the bottom line is that b3 class actions also pit the interests of class representatives class counsel and class members against each otherinot rarely but nearly all the time D Summary The point of this Part has been to demonstrate that a deontological identityofinterests risingtides interpretation of adequate representationi the interpretation seemingly offered by Hansberry and adopted by Amchemiis unworkable The circumstances that Rule 23 has identi ed as eligible for class treatment almost invariably create divisive interests among class representatives class counsel and class members Selfinterested class representatives can exploit these con icts to their advantage and to the dis advantage of some class members selfinterested class counsel can exploit these con icts to counsel s advantage and to the disadvantage of some class representatives some class members or both We can try to minimize the force of this conclusion by arguing that con icts are permissible as long as they are not too bad iby which we might mean that con icts can be ig nored either when the harm they cause is small ie smaller than the gains from class treatment160 or when the evidence suggests that the better angels of the representative s and counsel s natures have risen above abject self interest The former argument is impermissible from the con ictof interests perspective suggested in Amchem for it grounds adequate representation on 156 See 5147M note 105 157 Such a case can exist If the costs of class litigation are spread equally among all class members a class member with a very small proportional share of recovery might nd that the costs of litigation are greater than the recovery Cf Kamilewicz v Bank of Boston Corp 92 F3d 506 508 7th Cir 1996 describing a class action suit in which an individual plaintiff paid attorneys fees in an amount forty times greater than his recovery on the merits This case is discussed in a at notes 162765 and accompanying text 158 The evident circumstances in which class certi cation might nonetheless be sought are when class treatment is perceived to increase the likelihood of recovery for the claimant or counsel see 5147M notes 57758 60 and accompanying text or when a claimant that remains ultimately liable under a jurisdiction s ethical rules for the payment of litigation expenses Wishes to limit her liability for those expenses see 5147M note 106 and accompanying text 59 See in a note 166 and accompanying text 160 See Reynolds v Bene cial Nat l Bank 288 F3d 277 282 7th Cir 2002 noting a con ict Within a class but declining to regard this particular defect as fatal due to the costliness of remedying it through proper subclassing 2009 Rethinking Adequacy of Representation 1175 the greatest good for the greatest number footing that Amchem eschewed 1 The latter argument assumes that class representatives and counsel are virtuous principled altruistic or otherregarding to some degreeior at least that the threat of decerti cation can make them so On this view Rule 23 is written to set temptation in the path of class representa tives and class counsel and then it measures their worth by how well they resist Such a rule is to say the least passing strange Nor is it entirely con sistent with Hansberry and Amchem both of which proceeded from the premise that when a facial con ict of interest eXisted representation was inadequate in neither case did the Court ask whether on the facts the class representatives and class counsel had successfully resisted the temptation to selfdeal Finally replacing a no con ict of interest rule with a no self dealing in fact rule begs the question of how we determine when self dealing is going on and puts great pressure on court s ability to detect self ealing As a constitutional requirement adequate representation is not a doctrine we can discard because it is inconvenient If class actions cannot guarantee adequate representation it is the law of class actionsinot the doctrine of adequate representationithat must give way Hence the central conundrum of class actions Can we give meaning to the doctrine of adequate representation without rendering the modern American class action unconstitutional III Reconstituting Adequacy of Representation This Part proposes and defends a test for determining adequate representation that navigates between the reality of internal class con ict and the bene ts of class actions In short adequate representation with respect to a class member eXists when the actions of the class representative and class counsel place that class member in no worse a position than the class member would have occupied by retaining individual control of her litigation I begin by describing and justifying this principle I then defend the proposal against its principal objections and show its superiority to other possible solutions A Adequacy of Representation Not Harming Class Members Net Expectations The de nition of adequate representation that best accommodates the preference for individual control of litigation the need for class actions and 161 A er identifying a series of potential con icts Within the classibetween those with present claims and those With future claims between those entitled to opt out and those not entitled to opt out and between those asked to sacri ce their claims for consortium and those not asked to sacri ce their claims of asbestos exposureiAmchem did not then ask how small these con icts Were in relation to the bene ts of the class settlement See Amchem Prods Inc v Windsor 521 Us 591 627 1997 1176 Texas Law Review Vol 871137 the con icting interests within the class is simple The representation provided to a class member is adequate if and only if the actions of the class representative and class counsel can reasonably be expected to place that class member in no worse a position than that class member would have en joyed had she retained control of her own case More simply the principle might be stated D0 no harm So stated the principle seems selfevident Representation that leaves some class members worse off than they would have been without class cer ti cation must be inadequate right Surprisingly the answer has not always been yes The posterchild counterexample occurred in Kamilewicz V Bank of Boston C0rp162 in which a statecourt negativevalue class settle ment resulted in a 219 recovery and a 9133 assessment of attorneys fees for some class membersithus leaving these class members owing 89 as a result of their lawsuit163 The federal court refused to reexamine the state court s decision upholding the reasonableness of the settlement Admittedly cases with Kamilewiez s egregious facts are rare165 typically a successful class action garners a positive recovery for class members But that fact does not mean that the representation was adequate in the sense that I describe adequacy does not hinge on a positive result in absolute terms but rather a positive result in comparative terms so that the net result from class treatment equals or exceeds the net result from a class member s retention of control over her own case It is not dif cult to imagine circumstances in which a class action might result in a positive result for class members but still fail the adequacyofrepresentation test that I propose At the same time the requirement is fairly minimalia modest and elementary principle of justice rather than an extraordinary and heroic burden It is easy to comprehend and in most circumstances easy to ap ply Indeed it is possible to state the condition of adequate in mathematical form Let PI represent that probability of a class member s recovery in 162 92 F3d 506 7th Cir 1996 1 3 otzl amount awarded for attorneys fees was in dispute but lay somewhere between 85 million and 14 million 1d at 508 164 The underlying statecourt class action involved an alleged overcharge in a mortgage escrow account Kamilewicz 92 F3d at 508 The plaintiffs claimed in their federal suit that class counsel and the defendants in the statecourt class action had colluded in the settlement thus violating federal racketeering laws and their civil righw and rrther committing fraud conversion and malpractice 1d at 509 The district court dismissed the suit on the basis of the Rookeri Feldman doctrine which holds that federal courts cannot act as appellate courts over the decisions of state courts 1d at 509712 The Supreme Court denied certiorari Kamilewicz v Bank of Boston Corp 520 US 1204 1997 For a scathing critique ofthe decision see Susan P Koniak How Like a Winter T he Plight of Absent Class Members Denied Adequate Representation 79 NOTRE DAME L REV 1787 1808717 2004 165 But see Koniak rqpra note 164 at 1797 suggesting that classaction litigation is rife with ab se 166 Indeed the do no harm principle is a generalized statement of the reason that no con ict of interest exists in the Rule 23b3 class action that I described rupra at notes 152758 and accompanying ext 2009 Rethinking Adequacy of Representation 1177 individual litigation LI the size of the recovery in individual litigation F1 the attorneys fees in individual litigation and C I the costs of individual litigation And let PC represent that probability of a class member s recovery in class litigation LC the size of the recovery in class litigation Fc the member s pro rata share of attorneys fees in class litigation and Cc the member s pro rata share of costs in class litigation Adequate representation exists when PIXLI FICI PCXLC F6CC where 0 3 PC X LC FC CC I Explaining the Operation of the PrincipleiThiS formulation allows me to explore a number of the central features of this adequaterepresentation principle First as the P X L term re ects adequacy of representation de pends on expected recoveries it is determined before the fact not based on how the case actually turns out 67 Second as the F C term re ects ade quacy of representation depends on net rather than gross recovery Individual litigation can lead to an award L that is higher than a class award LC168 Compared to individual litigation however a class action can increase P and decrease F C which together raise the net expectancy de spite the lower award169 In effect therefore the do no harm principle requires the class representative and class counsel to spread the gains antici pated from a rising P and a falling F C net of losses anticipated by a falling L among class members so none are disadvantaged by class treat ment Third the lower limit of the formula 0 5 PC X LC 7 FC CO is necessary to account for negativevalue suits like Kamilewicz which would normally not be brought as independent litigation Without the lower limit a selfinterested class representative or class counsel can engage in a signi cant amount of selfdealing in such cases To take Kamilewicz as an example170 assume that in order to recover the class members 219 in overcharges an individual suit would have cost 2000 With an expected recovery of 199783 the class members almost surely will not bring the suit thus the effective value of their suit is 0 If 199783 rather than 0 is the number that constrains a selfinterested class representative or class counsel then the actions of the class counsel in Kamilewicz could have wors ened the nancial position of the Kamilewiczes by as much as 1997 without being regarded as inadequateia far more unjust result than the 89 injustice that occurred Placing the lower limit of zero on the adequacy 167 Thus a class member cannot claim the representation was inadequate merely because the class lost the case While the class member would have Won an individu case 168 See 5147M note 103 and accompanying text 169 For an illustmtion of this statement see mpra notes 10L06 and accompanying text 170 See 5147M notes 162764 and accompanying text 1178 Texas Law Review Vol 871137 principle re ects the reality that many largescale smallstakes claims are not independently viable Fourth the calculation of adequacy must be done for each class member It is not enough that overall the bene ts of class treatment exceed the bene ts of individual control that issue has already been determined by other provisions in Rule 23a171 Rather the Due Process Clause guarantees each and every class member adequate representation This demand can be tricky when class members have a variety of types of claims types of injuries and strength of claims and also have temporal variations To take the hypothetical example previously discussed assume a 1 million limited fund with 100 potential claimants each of whom has an equal and identical 20000 claim172 Assume as well that the claims of thirty of the claimants have already matured and those of the other seventy will mature in several years Individual actions by the present thirty claimants will deplete the bulk of the fund 600000 or 20000 apiece for each claimant and leave the remaining seventy claimants to recover a fractional share 5714 apiece of their claims in their individual suits Selfinterested class counsel might wish to bring this case as a b1B class action in order to obtain fees based on recovery of the full 1 million fund If the class action is successful class counsel might well contend for a simple and equitable distribution of 10000 to each class member less costs and fees If so it is unlikely that class counsel has adequately represented the thirty present claimants even though counsel has adequately represented the seventy future claimants and even though from a social viewpoint the settlement causes no overall harm the windfall to the seventy offsets the losses to the thirty and the per capita cost of implementing the remedy is likely less as well173 The only circum stance in which representation of the thirty class members would be adequate is when the costs of individual litigation F I C I are so high that the net in dividual recovery for the thirty claimants is greater than the net recovery under an equalshare class settlement174 171 See 5147M note 78 and accompanying text 172 See 5147M text accompanying note 103 173 This example shows a limitation of the do no harm principle its potential to achieve less ef ciency than other possible solutions I consider this criticism in a in subpart IIIB3 For a case on which this example is loosely based see Ortiz v Fibreboard Corp 527 Us 815 857759 1999 in which the court rejected certi cation of a b1B class in part because the settlement treated claimants equally even though class members Whose claims accrued before 1959 had stronger claims than class members Whose claims accrued a er 1959 174 For instance if We assumed that a present claimant s fees and costs for recovering 20000 Were 10000 and the likelihood of recovery Were 70 then the net expected recovery for the thirty claimanw in individual litigation would be 4000 07 X 20000 10000 On the other and if We assumed that the total fees and cosw in the class action Were 500000 or 5000 per class member then a settlement that proposed an equal division ofthe fund 10000 apiece would lead to a net recovery of 5000 1 X 10000 5000 for the thirty present class members and the class counsel s representation in agreeing to an equal settlement would be adequate 2009 Rethinking Adequacy of Representation 1179 Fifth adequate representation is not perfect representation The do no harm principle does not require the class representative and class counsel to maximize each class member s individual recovery It requires only that the class representative and class counsel do no worse for each class member than the class member would have done individually Thus a range of ac tions are likely to be deemed adequate the class representative and class counsel need not select the action that best advances the interests of each class member Indeed in light of nearly inevitable tensions within the class175 it is unlikely that they could consistently select actions that did so They need not be worried that their litigation decisions will be deemed in adequate merely because after the fact it turns out that those actions did not realize the greatest possible gain for a particular class member The do no harm principle is designed as a check on selfinterested behavior not as a principle that chooses actions based on the greatest good of a class member or even of the class as a whole Sixth and conversely the formulation is a oor not a ceiling Nothing prevents a class representative or class counsel motivated by notions of fair ness or justice from trying to make class members better off than they would have been in individual litigation Seventh the do no harm principle allowsiindeed eXpectsiconstant recalculation of adequate representation as a class action proceeds The ac tions of the class representative and class counsel are constantly altering P L F and C Thus at the outset of a case the actions of the class representative and class counsel might appear likely to better the lot of all class members Once settlement negotiations begin however the class representative or class counsel might be tempted to agree to terms that sell out the interests of some class members Upon settlement adequacy must be recalculated to compare the value of each class member s recovery under the settlement to the recov ery that could have been eXpected through individual litigation Eighth the principle controls collusive behavior Any principle of adequacy that asks only whether there is an identity of interests among class members does not prevent one identically situated class member from turn ing on another or the class counsel from turning on the class as a whole Any principle of adequacy that looks only to overall class bene ts runs the risk that the class representative or class counsel will with the tacit coopera tion of the defendant capture most of those bene ts for herself The do no harm principle assures that whatever side deals or winkandnod agree ments might occur in class actions class members are not made worse by them 175 See rqpra subparts IIA7C 176 Indeed in many situations institutional structures are likely to require or at least push class representatives and class counsel toward a more equitable treatment of class members than the one that the do no harm principle requires as is minimum See infra notes 235739 and accompanying text 1180 Texas Law Review Vol 871137 Ninth and signi cantly the do no harm formulation makes no distinction between the actions of the class representative and the actions of class counsel As I have described con icts can arise due to the actions of either177 This formulation looks at the results not the sources of action Thus it becomes unnecessary to specify separate duties or obligations for class representatives and class counsel17 Tenth and nally although this formulation is designed to deal with the problem of indifference in class representation179 it also links up with the other half of the adequacyofrepresentation problem incompetence180 One of the difficulties of an identityofinterest approach to adequate representa tion is its inability to answer the question How do we measure the competence of the class representative and class counsel The do no harm principle provides the answer Incompetence exists when neither the class representatives nor class counsel are able to ensure that class members will end up no worse off than they would have been if they had retained control of their case This answer provides a reference point for determining the nancial experiential legal mental and probity requirements that the competence doctrine places on class representatives and class counsel Indeed the operation of the principle promises numerous bene ts and solves some of the present predicament involved in the representation of competing interests In the following section I demonstrate that the principle can also be justi ed with reference to structural philosophical and economic arguments 2 Justz39fjing the PrincipleiThe do no harm principle for determining adequacy of representation is consequentialist it measures the adequacy of the actions of class representatives and class counsel solely in terms of their effects on class members It evaluates outcomes not motivations Therefore the principle becomes immediately unappealing to those who prefer to ground reasons for action or reasons for procedural rules either in virtue or in deontological duty181 If class representatives and 177 See supra notes 57760 107 121 134736 and accompanying text 178 In this regard the principle offers a coherent legal ethic for attorneys involved in complex litigation See TIDMARSH amp TRANGSRUD supra note 21 at 914 Ethical questions lie at the very heart of complex litigation and no proposed solution for complex litigation can be deemed adequate unless the solution works out its ethical implications JACK B WElNS39l39ElN INDIVIDUAL JUSTICE 1N MAss TORT LITIGATION 44 1995 noting that his experience on the bench demonstmted that the present ethics rules are predicated on the traditional relationships in twolitigant cases and do not do enough to provide realistic guidance to today s lawyers and judges 179 See supra notes 62 85 and accompanying text 180 See supra notes 62 84786 and accompanying text 181 For an examination of various virtuebased deontological and consequentialist theories of procedure including a strong critique of the consequentialist approach see Lawrence B Solum Procedural rstice 78 S CAL L REV 181 22amp32 242773 2004 See generally Robert G Bone T he Process ofMaking Process Court Rulemaking Democratic Legitimacy and Procedural E icacy 87 GEO LJ 887 918753 1999 describing ef ciencybased rightsbased and process based theories of procedure 2009 Rethinking Adequacy of Representation 1181 class counsel were compelled by a sense of virtue duty or altruism to make the class members better off than individual litigation would the adequacy principle that I propose might be unnecessary182 But the principle admits of no illusions on that score it is intended to act as a constraint on the self interested who wish to achieve the maximum bene t for themselves As such the do no harm principle imposes a consequentialist limit on their actionsia limit that speaks in the same language that they do Indeed both internal arguments183 and eXtemal arguments support the principle To begin with internal arguments the do no harm principle aligns the doctrine of adequate representation with the other central require ments of Rule 237ef ciency and the avoidance of harmsias well as with the structure of the joinder rules with the modern understanding of proce dural due process and with the results in Hansberry andAmchem As I have described the foundational requirement for all class actions which Rule 23a seeks in part to ensure is the efficiency of the class action in rela tion to individual litigation185 Likewise Rule 23b speci es certain harms that class actions must avoid186 Both requirements are consequentialist in orientation Rules 23a and b3 are utilitarian in orientation while Rules 23b1 and b2 have more solicitude for preventing harms to indi viduals even if they are not necessarily social harms As we have also seen Rule 23 still retains an egoist or selfinterested cast in certain regards espe cially in its willingness to place the decision to seek class certi cation in the hands of class representatives and class counsel187 The do no harm princi ple mediates among these diverging consequentialist tendencies and harmonizes them It leaves room for some selfinterested behavioriit does not require the representative or counsel to seek the best outcome for the class or for each class member At the same time it assures that the class action will do at least as much good as individual litigation would do thus achieving certain social bene ts And it avoids harming absent class members w 39c is a concern that manifests itself speci cally in Rule 23b1B and b2 The do no harm formula is not the only prin 184 182 The principle is a oor on action not a ceiling 183 By internal arguments I refer to arguments derived from legal rules structures and precedents These arguments might also be described as forrnalist in the sense that existing legal rules structures and precedents constrain or determine the choice of a proper legal outcome See Frederick Schauer Formalirm 97 YALE LJ 509 511729 1988 de ning common uses of the term formalism as variously the denial of choice or the limitation of choice Emil Sherwin A Defeme ofAnalogical Reasoning in Law 66 U CHI L REV 1179 1189793 1999 stating that argumenw by analogy help to make law more stable and less errorprone than does openended reasoning 184 By external arguments I mean arguments grounded in sources other than legal structures rules and precedents 185 See 5147M note 78 and accompanying text 186 See 5147M notes 42746 and accompanying text 187 See 5147M notes 517761 and accompanying text 1182 Texas Law Review Vol 871137 ciple that can mediate among these tendencies188 but it sits nicely as a compromise among them For the same reason the formula is aligned with principles and ideas that drive joinder law more generally As I have discussed the default join der rule Rule 20 allows plaintiffs to engage in egoist joinder behavioribut it ultimately checks that behavior by considering both the efficiency of a plaintiff s joinder decision and the fairness of that decision to the defendant189 In addition Rule 19a1Bi requires joinder of absent parties when the failure to join such parties as a practical matter impairs or impedes the person s ability to protect the interest 190 Thus at the broader level of joinder the compromise among egoism utilitarianism and altruism that manifests itself in Rule 23 also nds a place Therefore the do no harm principle which likewise nds middle ground that partially validates each of these tendencies ts comfortably within the range of ideas that ani mate American joinder decisions A third internal argument is the do no harm principle s consistency with the modern approach to due process Although H ansberry itself was a bit dodgy about the exact source of the constitutional right to adequate representationiit located the source of the right in both the Due Process Clause and the Full Faith and Credit Clausemithe right is cast purely in due process terms today192 The Supreme Court provided the modern test for determining the constitutionality of 39 r 39 39 of 39 quot quot quot 39 39 39 39 procedure in Mathews V Eldridge193 departures from adversarial process must have expected bene ts that equal or exceed the costs to an individual from the loss of traditional adversarial process194 Therefore as a type of 188 For instance I consider another possible principleia rule that adequacy requires class representatives and class counsel to improve the positions of class members in relation the second best joinder alternative See infra notes 248755 and accompanying text e rupra notes 20723 36738 and accompanying text39 see also FED R CIv P 19a1Bii requiring joinder when a plaintist joinder decision 1eaves an existing p subject to a substan 39 risk of incurring double multiple or otherwise inconsistent obligations 190 This language parallels that of Rule 23b1B which shows a similar solicitude for protecting the righw of absent plaintiffs The two protections do not con ict joinder under Rule 19 however is subject to the requiremenw of Rule 23 FED R CIv P 19d 191 See 5147M note 94 See eg Richards v Jefferson County 517 US 793 805 1996 holding that due process prevents the assertion of the preclusive effect of a prior judgment against a nonparty that was not adequately represented in the prior case Phillips Petroleum Co v Shutts 472 US 797 812 1985 explaining that due process requires that the named plaintiff at all times adequately represent the interests of the absent class members 193 424 US 319 1976 194 1d at 319 335 The Supreme Court continues to adhere to this formulation See Bournediene v Bush 128 S Ct 2229 2268 2008 citing to the Mathews v Eldridge test to support the idea that the necessary scope ofhabeas review in part depends upon the rigor of any earlier proceedings Harndi v Rumsfeld 542 US 507 509 529 2004 using the llIathewr v Eldridge test to determine the scope of an enemy combatant s opportunity to contest his detention On the economic underpinnings of Mathews v Eldridge see POSNER rupra note 28 211 at 5937 94 2009 Rethinking Adequacy of Representation 1183 departure from traditional adversarial theory195 class actions satisfy the Mathews V Eldridge formulation of due process as long as the loss to each class member from not being able to individually litigate her claim does not exceed the expected bene ts of class treatment One of the problems of the con ictofinterest approach for determining adequacy of representation as a constitutional matter is its poor matchup with the decidedly consequentialist test of Mathews V Eldridge under the con ictofinterest approach repre sentation can be inadequate even if the con ict costs less than the gains from class treatment On the other hand the do no harm approach matches up well with the Mathews V Eldridge formulation for due process Its insistence that class members not be made worse by class treatment guarantees that as long as the class action reaps social bene ts 97 Mathews V Eldridgestyle due process has been satis ed The nal internal argument is the principle s consistency with the outcomes in both Harisberry and Amchem In H arisberry the position staked out by the class representative in the rst class action had the potential to harm those class membersiincluding future property owners who would buy the property during the twenty ve year term of the racially restrictive covenantiwho for economic or social reasons wished to sell to African Americans On a do no harm theory answering the question of adequate representation is not as simple as showing the possibility of different litiga tion positions among class members Rather the issue is whether at the time that the rst class action was certi ed obtaining a judgment nding that the covenant was valid was expected to put any class member in a worse position than she would have been in had she been allowed to control her own litiga tion To answer that question a court would have needed to compare 1 the expected valueifor each present and future homeowner during the remain ing duration of the covenantiof the home in a whiteonly neighborhood after subtracting the cost of bringing the rst classaction litigation but add ing the expected cost of an individual s possible future suit to enforce the covenant against 2 the expected valueifor each present and future home owneriof the home without any restrictive covenants If the latter value was greater than the former then the H arisberry class action violated the do no harm principle On the facts of Harisberry it appeared that this was the 195 See swra text accompanying note 41 196 See swra notes 88797 and accompanying text 197 The requirements of class certi cation ensure that these bene ts will accrue class treatment must be more ef cient than individual litigation see supra note 78 and accompanying texL and must avoid harms that individual litigation causes see supra notes 42748 and accompanying text 198 Of course the Mathews v Eldridge test could also be satis ed on a lesser showing than the do no harm approach for it allows individual litiganw or class members to be made Worse off as long as the social gains from class treatment are reat enough Thus the do no harm approach is not the constitutional minimum thatMathews v Eldridge might tolerate 1184 Texas Law Review Vol 871137 case199 Therefore the representation in the rst case harmed the interests of some class members and was inadequate as to them Likewise Amchem is correctly decided on a do no harm approach even though the Court used a different rationale Amchem had identi ed two principal con icts within the class the failure to provide any recovery for consortium claimants and the failure to protect future claimants by giving them in ationadjusted future awards that would have made their claims equivalent in value in realdollar terms to those of class members with pre sent claims200 On the rst issue the Court was clearly correct as long as consortium claims had a positive value in individual litigation if they did then the class representatives who agreed to the dismissal of the claims did harm to the interests of those class members Available evidence suggests that such claims had a positive net value201 With regard to the presenti future con ict that Amchem identi ed the do no harm approach is a more compleX analysis than the one in which the Court engaged but its outcome is the same With respect to future claimants the do no harm principle would have required the Court to compare the eXpected value of each class member s individual claim discounted by the possibility that the defendants would become insolvent and less the cost of individual litigation to the value received in the litigation if any class member stood to gain from individual treatment then representation was inadequate as to that member Given the values of such claims in relation to the eXpected payouts in the settlement it seems likely that the decision of class representatives in Amchem to settle caused harm to some class members202 Under the do no harm approach however the harm was most likely incurred by present class members the value of future class members claims needed to be discounted by the realis tic possibility that the settling defendants might declare bankruptcy or become insolvent In addition the do no harm approach reveals another problem with adequate representation on which the Court did not focus In Amchem class counsel agreed to settle eXisting individual claims on better 199 At the time that the rst class action was litigated property values in the racially restricted neighborhood Were falling due to economic and social conditions AfricanAmericans Were y 39 39 g purchasersiand they Were Willing to pay a premium to buy the homes in the neighborhood Sales conditions continued to deteriomte between the time of the rst class action the time of the Hamberry litigation and some home owners Were eager and Willing to sell to AfricanAmericans See Tidmarsh rwra note 66 at 240 251 254 25amp57 262 describing forces that caused AfricanAmerican demand for homes in the Washington Park neighborhood and the sale of certain homes to African Americans 200 See rwra notes 82783 and accompanying text 201 For an example of preAmchem asbestosexposure litigation involving individual claims akin to the claims settled in Amchemia case in which two spouses Were awarded 100000 apiece for consortium damagesisee Carpenter v GAF Corp Nos 903460 903461 1994 WL 47781 at 1 6th Cir Feb 15 1994 202 Compare id af rming damages awards in individual asbestos litigation of 498750 and 540000 with TlDMARsH rwra note 97 at 52753 noting that the settlement range for most mesothelioma claims inAmchem was 2000 to 200000 2009 Rethinking Adequacy of Representation 1185 terms than they settled the claims of class members203 Assuming that the amounts of the individual settlements were fair204 a do no harm principle holds that in failing to obtain comparable settlement amounts for class members whose claims would mature before the defendants bankruptcy or insolvency would presumably drive down the value of future claims the Amchem representatives and counsel left those class members worse off than they would have been in individual litigation and therefore failed to provide them with adequate representation The do no harm principle also is justi ed by eXtemal arguments Philosophically the principle rests on two premises individual autonomy and the view that as John Rawls put it people organize into societies as a cooperative venture for mutual advantage 206 The value of autonomy is a foundational premise in modern Western moral and political philosophy207 Likewise the classic modern account of societyifrom Hobbes through Locke Rousseau and Mill to Rawlsiis that people give up some of their autonomy because social cooperation attains something more desirable whether that something is security enjoyment of property the moral basis for civil liberty or the prevention of harm to others208 But that account still does not determine the precise constraints that society can impose on an individual s right to actiin other words the extent to which society can bend one individual s autonomy to the comparable claims of others to their 203 See Georgine v Arnchem Producw Inc 157 FRD 246 298 305711 ED Pa 1994 analyzing the degree of the disparity rev d on other grounds 83 F3d 610 3d Cir 1996 a d rub nom Arnchem Prods Inc v Windsor 521 US 591 199739 Koniak rupra note 2 at 1064778 204 The objectors to the Amchem settlement argued that the amounts of the individual settlements were too high thus proving collusion between class counsel and the defendants Georgine 157 FRD at 306 The district court found that the paymenw to individuals were Within historical settlement ranges and therefore justi ed 1d at 307710 205 As I have noted the do no harm principle makes no distinction between the ethical obligations oflawyers and the 39 A quot quot39 39 39 nor does it need to break out collusion as a separate concern See rwra notes 177778 and accompanying text Therefore even though the district court found neither ethical improprieties nor collusion in the settlement of the individual claims Georgine 157 FRD at 305711 the do no harm principle nonetheless nds the settlement improper as to those class members Whose claims matured before or soon a er the ling of the class complaint Whether the representation of class members with claims that matured in the far future was inadequatethe issue on which the Supreme Court focused in Amchemiis less clear under the do no harm approach the answer requires a comparison between the settlement value of the claims and the expected value of those claimsi a er discounting for the possibility of bankruptcy or other events such as a congressional bailout of the asbestos industry that might diminish their valueiin the absence of a settlement 206 JOHN RAWLS ATHEORY OF JUSTICE 4 rev ed 1999 207 See John Christman Autonomy in Moral and Political Philosophy in ENCYCLOPEDIA OF PHILOSOPHY mpra note 29 th39 nlzm innfnrd 39 39 Autonomy is a Word with multiple potential meanings 1d Here I use it in the sense of freedom from external constmints on achieving an individual s desired goods 208 THOMAS HOBBES LEvrATHAN 87790 JM Dent amp Sons Ltd 1914 1651 JOHN LOCKE SECOND TREATISE OF GOVERNMENT 95 GB Macpherson ed Hackett Publ g Co 1980 1690 MILL mpra note 49 at 2339 RAWLS mpra note 206 at 439 JEANJAC UES ROUSSEAU ON THE SOCIAL CONTRACT 5256 Roger D Masters ed Judith R Masters tmns 1978 1762 1186 Texas Law Review Vol 871137 autonomy209 For Locke the natural law imposed necessary limits210 for Kant the categorical imperative required each individual to treat every indi vidual as an end not a means211 for Mill the limiting principle was the maximization of utility212 for Rawls it was the veil of ignorance213 The do no harm principle borrows from this tradition relying most on Mill s famous observation that one individual s right to swing a st ends at another person s nose214 on Kant s categorical imperative and on the Rawlsian veil of ignorance In effect class representatives and class counsel become the agents placed in charge of the claims of class members at the same time they are also looking after their distinct and independent interests The do no harm principle insists that in exercising their autonomous right to advance their own litigation interests they do not act in a way that harms the litigation interests of those for whom they serve as agents It guarantees that the society created by the class representative and class counsel works together for mutual advantage the representative and counsel cannot repre sent those that the class action places at a disadvantage in relation to their autonomous right to bring individual litigation It does not deny the class representative and class counsel the opportunity to achieve better outcomes for themselves than they could achieve through individual litigation Indeed the provision of such an opportunity is a necessary incentive to attract repre sentatives and counsel to le class actions that as we have seen bene cially prevent certain types of undesirable harm But in exercising this personal freedomithis right to swing their arms if you willirepresentatives and counsel must stop when they threaten to hit the noses of class members By guaranteeing absent class members the same expected if not better out come as individual litigation would have yielded class representatives and class counsel also respect absent class members as their own ends rather than simply as a means to achieve the ends of the representative and counsel Moreover according to the Rawlsian veil of ignorance arrangements that bene t some more than others can be regarded as just when all those affected by the arrangementinot knowing whether they will occupy a fa vored or unfavored position under the arrangementiwill nonetheless 209 See William B Rubenstein Divided We Litigate Addressing Disputes Among Ger Members and Lawyers in Civil Rights Campaigns 106 YALE LJ 1623 1645 1645746 1997 The primary problem with the individualist model is the central downside of liberalism generally a satisfactory account of its limits 210 See LOCKE supra note 208 96 nding that once individuals choose to become part ofa mmunity they submit to the will and determination of the majority Where the majority determines by the law of nature and reason the power of the Whole 211 Hans Reiss Introduction to KANT POLITICAL WRITJNGS supra note 27 at 1 18 212 MILL supra note 49 at 14 RAWLS supra note 206 at 11 214 See supra note 49 and accompanying text 215 See supra subpart 1B N L 2009 Rethinking Adequacy of Representation 1187 consent to it Thus assume that we place the class representative the class counsel and all class members behind a veil of ignorance so that they do not know which position they will occupy in a class action We then ask them to choose one of three governing principles for the behavior of the class repre sentative and class counsel a principle that permits no con icts of interest a principle that tolerates con icts of interest and further allows the class repre sentative and class counsel to act in a selfinterested way that risks harm to class members and a principle that tolerates con icts of interest when no one is made worse by the con ict and some are made better The position on which all including the riskaverse should be able to agree is the lastithe do no harm principle217 Like the no con icts position no one ends up worse off from class treatment like the allow all con icts position some are made better off The do no harm principle creates no risk of loss and promises the possibility of a gain from class treatment It is therefore the principle on which all sitting behind the veil of ignorance can agree on What the do no harm principle rejects is the greatest good for the greatest number solution of utilitarianism It is easily possible to construct a Kamilewicz type classaction hypothetical in which most class members end up better off from class as opposed to individual litigation by say 5 apiece while just a few class members end up worse off by 1 apiece Under a greatest good measure of adequacy the representation is ne Under the do no harm approach it is not The do no harm approach retains a greater respect for the individualist model of American adjudication which places a premium on each litigant s liberty and autonomy218 It also forces those who gain from class treatment to redistribute some of those gains to others so they become at least indifferent to the outcome219 Even if class 216 RAWLS rwra note 206 at 118723 217 Rational Wealth maxirnizers might prefer the second position in some circumstances Assume that the class action contains one million people plus one class counsel Assume as Well that the expected outcome from individual litigation is a gain of 1 but the expected outcome from the class action is a loss of 50 cents for every person in the class except for the class counsel who will receive a fee of 2 million Under this scenario a rational individual sitting behind the veil of ignorance might support the class action for there is a one in 1000001 chance of obtaining 2 million thus an expected gain of roughly 2 and a one million in 1000001 chance of being made Worse 150 roughly an expected loss of 150 When We consider riskaverse individuals however the do no harm principle becomes the principle on which all sitting behind a veil of ignorance would choose 18 See Rubenstein rupra note 209 at 1644 Current procedural and ethical rules encoumge group members and attorneys to pursue their own individual paths in ling pursuing and constructing test cases rupra notes 24728 and accompanying text 219 Utilitzrian theory recognizes the reality that harm must sometimes be visited on a few in order to achieve the greater good39 thus a switchrnan can permissiny route a runaway train onto the 39th one Worker rather than keep it on the tmck with ve Workers See Judith Jarvis Thomson The Trolley Problem 94 YALE LJ 1395 1395 1985 These hard ethical dilemmas arise When harm to some is inevitable and the question is how to keep harm to is bare minimum But that problem is different from harming someone When there is no reason to do so In the context of class actions When the class achieves gains that exceed its costs asking some members ofthe class to bear losses When it is possible to distribute some ofthe gains achieved by others in 1188 Texas Law Review Vol 871137 action status takes away the autonomy of class members to act on their own litigation interests it guarantees them the expected bene ts of that autonomy The distribution of the gains of class treatment among the class mem bers can also be explained on economic grounds The do no harm approach to adequate representation forces class representatives class counsel and class members who bene t from class treatment to internalize the costs that the class action might otherwise impose on other class members Without a mechanism to internalize these costs class representatives and class counsel will be too willing to of oad the costs of the class action onto some class members and to set out on courses of con duct that enrich themselves while neglecting the costs of their behavior Indeed do no harm adequacy of representation is a speci c application of the principle of Pareto improvement the economic concept that holds an action to be more ef cient when at least one person is made better off by the action and no one is made worse off220 Thus in comparison to individual litigation the do no harm principle ensures greater ef ciency Admittedly the do no harm principle does not go so far as to insist on Pareto optimality the economic concept that de nes ef ciency as the state of affairs in which no further Pareto improvements can be made22 In neoclassical economics Pareto optimality is often tempered by the Kaldori Hicks re nement which holds that an action is efficient if wealth transfers to achieve Pareto optimality could be made even when they are not in fact made222 One reason that the KaldoriHicks re nement has been thought necessary is because of the dif culty of adopting largescale social or economic policies that make no one worse off and the related costliness of identifying those who are made worse off and transferring wealth to them223 The do no harm principle rejects the KaldoriHicks re nement and insists on transfers to those who might be made worse off by class treatment The reason is that unlike largescale social or economic policies whose various permutations can create polycentric distributions of winners and losers224 class actions are fairly selfcontained and organized around the discrete goal of maximizing the value of a class s legal claims Therefore it is relatively the class to those that would be harmed is impermissible The do no harm principle requires this distribution 220 See POSNER mpra note 28 12 at 12 221 See THOMAS J MICELI THE ECONOMIC APPROACH TO LAW 4 2004 explaining that an allocation is Pareto ef cient or Pareto optimal if there is no other allocation that is Pareto superior or 222 This state is also sometimes described as potential Pareto ef ciency 1 at 57639 POSNER mpra note 28 12 at 13 223 See MICELI rqpra note 221 at 576 describing the problems with using Pareto ef ciency to evaluate proposed policy changes and explaining that economisw employ KaldoriHicks ef ciency to address these problems A MITCHELL POLINSKY AN INTRODUCTION TO LAW AND ECONOMICS 879 3d ed 2003 illustrating the con ict between ef ciency and equity 224 uller rupra note 24 at 394795 discussing polycentrism in the adoption of Wage and price legislation Whose various permutations create different advantaged and disadvantaged parties 2009 Rethinking Adequacy of Representation 1189 easy and inexpensive for class representatives and class counsel to identify class members who might be harmed by the positions taken by the represen tative and counsel in seeking to maximize that value and then to modulate their behavior to make those class members at least indifferent to the out comes they receive in the class action I will return to this point shortly225 For now however it is enough to say that the do no harm principle ensures that class treatment will be more ef cient than individual litigation andi because the no con ict of interest principle prevents certi cation of class actions in which such ef ciency might otherwise be attainedmiwill also lead to greater ef ciency than the no con ict of interest principle In sum the do no harm principle acknowledges the inevitability of con icts of interest in class actions and addresses those con icts through a simple rule that leaves no one worse off because of them Because all have an expected outcome equal to or greater than the outcome that they would have achieved through individual lawsuits the principle vindicates the sub stance of the individualist model of litigation At the same time it captures the bene ts of reduced harms to class members to the defendant and to so ciety that class actions seek to achieve Because none are made worse and some are made better the do no harm principle also ensures that class ac tions will enhance social welfare B Four Objections Admittedly the do no harm measure of adequate representation is not a perfect solution In this subpart I examine four objections The rst threeiadministrability equity and inef ciencyiattack potential weak nesses in the principle itself The nal objectionithe availability of altemativesiexplores whether other solutions might achieve better results in dealing with con icts of interest while still enhancing social welfare 1 AdministrabililyiThe rst critique of the do no harm principle is the potential difficulty of its administration The critique has two components The rst is the inability to quantify many of the variables necessary for an exact calculation The second related concern is the seem ing need for recalculation of the class representative s and class counsel s adequacy after every action that they take It is indeed true that precise measurements under the do no harm formula are dif cult to make especially early in the litigation On the other hand it is unlikely that such detailed calculations will be necessary Early in a class action that is led as a litigation class action227 a prima facie showing 225 See in a notes 2305739 and accompanying text 226 See 5147M notes 88797 and accompanying text 227 A litigation class action is distinguishable from a settlement class action As the terms imply the former is led with the stated goal of adjudicating the dispute to a nal judgment the latter is led to give effect to a settlement upon which the defendant has agreed with the putative 1190 Texas Law Review Vol 871137 of adequate representation can be made by proving that the class action does not reduce the value of any class member s claims but does reduce the liti gation costs of each class member in relation to individual litigation228 The same ballpark estimate can be used as major developments in the caseithe joinder of new parties the ling of amended pleadings the dismissal of claims summary judgment the trial and so oniunfold229 Should a settle ment occur the court has the opportunity to calculate adequacy with greater precision some necessary values such as the amount of per capita recovery and the size of the fees and costs can now be known with a degree of certainty Of course even here some variablesisuch as the expected value and costs associated with individual litigationicannot be known with precision but ballpark data will be available in many cases230 And in the event of true uncertainty about whether class treatment will harm a class member s interest the rule that the class representative must prove adequacy 31 of representation will defeat class certi cation 2 EquityiA second criticism of the do no harm position is that it permits inequalities within the class This criticism can take two forms The rst formithat it does not guarantee an equal outcome to every class memberican be dismissed out of hand In most situations different class members come into the class with claims that are unequal in terms of their class representative and class counsel See TJDMARSH amp TRANGSRUD rupra note 21 at 550 explaining that class actions formerly Were brought principally to litigate claims but now class actions are increasingly used as a Way to achieve settlemen 228 Conversely inadequacy of representation could be shown with respect to a particular class member if in a positivevalue suig either 1 the class action reduces the expected gross recovery of that class member s claim for instance by not asserting a unique viable recoveryenhancing legal theory that a particular class member has by more than any expected savings arising from the spread of litigation cosw among the class39 or 2 the per capita cost of class treatment exceeds any increases in expected gross recovery from class treatment In a negativevalue case inadequacy of representation exists when the expected gross recovery for some class members is less than the per capita litigation cosw that are likely be assessed against that member 229 If a defendant or class member believes that interim developments between major events demonstrate inadequacy nothing prevents that party from raising the issue with the court f Reynolds v Bene cial Nat l Bank 288 F3d 277 285 7th Cir 2002 noting the dif culty of the precise valuation of a class s expected recovery in litigation but suggesting Ways to achieve at least a ballpark valuation Especially When a class action is certi ed alter the litigation has matured ree rupra note 126 such data should be available In negativevalue cases however it is unlikely that there have been enough prior cases for the litigation to reach maturity and therefore there is a dearth of data See Benjamin J Siegel Note Applying a Maturity Factor Withmt Compromiring the Goals of the Clair Action 85 TEXAS L REV 741 751752 2007 observing that negativevalue suits are unlikely to be litigated enough to yield adequate data for maturity analyses Nonetheless in these cases the do no harm adequacy question is simple and sWer does not require data from prior cases Does any class member have a negative net recovery calculated by subtracting the pro rata share of fees and expenses assessed against that class member from the settlement proceeds that the class member receives 231 See Berger v Compaq Computer Corp 257 F3d 475 481 481782 5th Cir 2001 articulating the standard that the party seeking certi cation bears the burden of establishing that all requirements of rule 23a have been satis ed N L 0 Q 2009 Rethinking Adequacy of Representation 1191 number and strength and in terms of the injuries that they have suffered Class actions are not economic leveling devices intended to enforce a strict equality of outcome on their members A second form of this criticism is more troublingithat the do no harm principle can foster greater inequalities than individual litigation would The criticism has particular salience in the largescale smallstakes conteXt To take a hypothetical example assume a negativevalue suit in which 10 million customers have lost 2 apiece as a result of an illegal over charge by a credit card company The do no harm principle would be satis ed if the case settled for 10000003 with the class representative re ceiving 3 the class counsel receiving 10 million and the remaining class members receiving nothing Because the remaining class members are no worse off than they would have been with individual control their claims were as a practical matter worthless and because the class representative and class counsel are better off the representation in this case is under the do no harm principle adequate My initial reaction to this evident dif culty was to switch the do no harm principle to the weak Paretooptimal condition of do some good in other words to require the class representative and class counsel to distribute the overall gains from class treatment in such a way that every class member is better off as a result of class treatment But that change does little to solve the problem for the do some good condition is satis ed if class counsel agrees to take 999000001 in fees and costs gives 3 to the class representative and gives one cent to the remaining 9999999 class members Indeed on these facts the do some good solution is less ef cient than the do no harm principle because of the costs associated with distributing the penny to each class member The do no harm principle does not bar the hypothetical 10000003 settlement Do no harm adequacy does not require equality of treatment among class members and it can create greater inequities between the class representative and class members than those that predated the lawsuit when the class representative and class members had equal 2 claims that as a practical matter were equally worthless232 The principle is intended to check selfinterest and collusion that make class members worse off It is a minimal principle rather than a maXimal version of adequacy that requires the gains from class treatment to be distributed among claimants in propor tion to the strength and eXtent of their claimsiin effect it is an equal gains for equal claims principle 232 This example is an application of one common criticism of Pareto improvemenw and optimalityithat they can foster greater social inequalities even as they improve ef ciency See POSNER rqpra note 28 12 at 13714 discussing how inequalities in the distribution of Wealth affect the consumption and production decisions of parties to an economic transaction AMARTYA KUMAR SEN COLLECTIVE CHOICE AND SOCIAL WELFARE 22 1970 An economy can be optimal in this sense even When some people are rolling in luxury and others are near starvation as long as the starvers cannot be made better off Without cutting into the pleasures of the rich 1192 Texas Law Review Vol 871137 Despite its surface appeal one problem with an equal gains for equal claims principle is the dif culty of applying it in many class actions When class members present an array of temporally and geographically dispersed claims and injuries an equal gains for equal claims principle requires the collection of a great deal of information as well as dif cult judgments about which claims claimants and distributions are in fact equal 233 Such a principle would therefore eat deeply intoiand perhaps surpassithe gains in reduced litigation costs and avoidance of harms that are the raison d tre of Rule 23 The implementation of the principle will also make the tasks of serving as class representative and class counsel more onerous and less ap pealing and will make collateral attacks on the adequacy of representation which undermine the nality of class litigation more likely234 s ort an equal gains for equal claims principle will likely lead to fewer class actions than a do no harm principle thereby thwarting the bene ts that class ac tions provide That fact alone is not a reason to reject such a principle but there is another reason as well Realworld dynamics temper the inequities inherent in the do no harm principle and push the parties toward the equal gains for equal claims principle without incuning the added costs of adopting the latter principle across the board To eXplain begin by assuming that the class action reaches trial and the fact nder jury or judge nds the defendant liable In considering the appropriate remedy the selfinterested class representative will want to pitch the remedy whether injunctive or monetary as favorably to herself as possible The selfinterested class counsel is likely to push back against the preference at least in cases seeking monetary relief for the size of the attorneys fee grows as counsel enhances the value of the claims of the entire class Moreover to use to the creditcard hypothetical again it is inconceivable that after nding the defendant liable 233 The do no harm principle also requires the collection of some ofthis same information See infra note 235 and accompanying text But it does not require a judge to classify class members into equal groups for the purposes of determining adequacy 234 The scope of a class member s right to attack a judgment collaterally has divided the courts Compare Epstein v MCA Inc 179 F3d 641 648 9th Cir 1999 restricting the right of collateral attack with Stephenson v Dow Chem Co 273 F3d 249 257 2d Cir 2001 a d in part by an equally divided Court and vacated in part 539 Us 111 2003 permitting collateral attack when class members Were inadequately represented in the class action and WalMart Stores Inc v Visa USA Inc 396 F3d 96 110 2d Cir 2005 distinguishing Stephenson and restricting the right of collateral attack The literature is equally divided See e g Geoffrey C Hazard Jr et al An HistoricalAnalysis ofthe Binding Eject ofClass Suits 146 U PA L REV 1849 1946747 1998 tmcing the historical progress of class suits with particular focus on the consistent failure to adequately resolve the issue of class suiw preclusive effect on absentees Henry Paul Monaghan Antisuit Injunctions and Preclusion Against Absent Nonresident Class Members 98 COLUM L REV 1148 1202 1998 Absent class members should be allowed to make their collateral due process challenges in a forum of their own choosing For attempw to nd a middle ground see Marcel Kahan amp Linda Silberman The Inadewate Search for Adequacy in Class Actions A Critiwe oprstein v MCA Inc 73 NYU L REV 765 789 1998 and William B Rubenstein Finalin in Class Litigation Lessonsfrom Habeas 82 NYU L REV 790 867 2007 2009 Rethinking Adequacy of Representation 1193 a jury or judge will order a 3 recovery for the class representative and a onecent recovery for the remainder of the class It is important to recall that in order to satisfy a do no harm principle the class representative and class counsel must have presented to the trial judge evidence of the nature strength and eXtent of the claims of class members Armed with the knowl edge that the claims of every class member are equal in strength and size the trial judge and the judges on appeal will not permit such an inequitable dis tribution to survive posttrial review of the judgmentm Therefore as a realistic matter the only circumstance in which the inequity created by a do no harm principle might be realized is the settlement conteXt Even with settlement however realworld checks pre vent gross inequalities in treatment A class settlement requires judicial approval and judicial approval can be given only if the court nds the set tlement to be fair reasonable and adequate 236 As the last paragraph noted the judge will possess information regarding the nature of each class member s claim Given the judge s knowledge a settlement containing gross disparities in the distribution of settlement proceeds in which the class representative and class counsel capture virtually all of the remedy that eX ceeds the remedy that class members would receive in individual litigation is unlikely to secure judicial approval237 Moreover in positivevalue monetary suits a gross distributional disparity is likely to cause some class members to opt out of the settlement if they have the opportunity to do so238 For these reasons alone a selfinterested class counsel who is ultimately indifferent to the distribution of the remedy would be unlikely to acquiesce to seriously inequitable provisions that threaten either the certi cation of the class and hence the ability to obtain a fee or the size of the fee A nal dynamic that minimizes the possibility of inequitable treatment under the do no harm approach is the likelihood that a settlement would establish a claims 235 Admittedly selfinterested class representatives knowing this fact have an incentive to skew the evidence presented in the initial do no harm showing in order to make their cases appear stronger and therefore deserving of a greater eventual remedy But there are clear limits on the extent of the skewing that can occur if class representatives make their claims appear too disparate from that of the remainder of the class they will fail the commonality and typicality requiremenw of Rules 23a2 and a3 See Gen Tel Co of the SW v Falcon 457 US 147 156760 1982 reversing the classcerti cation order because the district court committed error by presuming that epresentative s claim was typical of other racialdiscrimination claims against the defendant corporation 236 FED R CIv P 23e2 237 But unfortunately it is not impossible as the Kamilewicz story proves See rupra notes 162764 and accompanying text 238 In a b3 settlement class action class members have a right to opt out FED R CIv P 23c2Bv In a litigation class action that was previously certi ed a court has the power to provide a second optout right at the time of the settlement FED R CIv P 23e439 see also AGGREGATE LITIGATION mum note 6 311 recommending that a second optout right ordinarily be given But see David Rosenberg MandatoryLitigation Class Action The Only Option r Mass Tort Cases 115 HARV L REV 831 840766 2002 arguing that plaintiffs should not be permitted to opt out of class actions I a i H 1194 Texas Law Review Vol 871137 resolution facility perhaps in combination with a backend optout provision that allows parties dissatis ed with an award to enter a triallike dispute resolution process239 These quasiadministrative mechanisms tend to treat groups of like claimants very much alike rather than to create disparate remedies for similarly situated class members 3 EfficiencyiThe do no harm principle can also be criticized for its inef ciency There are two branches in the criticism The rst is that the do no harm 39 39 39 sp hall the 39 each class member s expected outcome from retaining individual control the baseline against which adequate representation is measurediis either too costly or too prone to error The second is that alternate formulations of adequate rep resentation realize greater ef ciency than the do no harm principle As to the rst criticism determining each class member s expected outcome from individual litigation presents no dif culty in negativevalue suits in which the practical value of recovery is by de nition zero When the claims of class members have positive valueiand when the value of those claims can depend on such matters as the type and strength of the claims and defenses the type and extent of injury temporal or geographical dispersion and the defendant s future solvencyithe criticism has more salience Once again however practical considerations modulate this concern First the costs of making the do no harm calculation and of err ing in the calculation are less troublesome in injunctive suits which typically involve a limited array of potential remedies than they are in actions seeking monetary recovery Second other constraints in Rule 23 such as Amchem s narrow interpretation of Rule 23b3240 make sprawling class actions with vastly different claims defenses and injuries unsuitable for class treatment on grounds other than adequacyithus making the dif cult calculation of individuallitigation variants in these cases unnecessary Next for most purposes a judge can ballpark the do no harm calculation241 Fourth the risk of failing to prove adequate representation falls on the class representa tive and class counsel242 who are typically in the best position to provide information from which a reasonably accurate and inexpensive calculation 239 Two variants of this approach are found in the settlements established and invalidated on other grounds inAmchem Products Inc v Windsor 521 US 591 1997 and Ortiz v F ibreboard Corp 527 US 815 1999 For descriptions ofthese plans see TlDMARsH swra note 97 at 517 54 64766 A comparable plan was negotiated in the Silicon Gel Breast Implant litigation See In re Silicone Gel Breast Implant Prods Liab Litig No CV 92P10000S 1994 WL 578353 ND Ala Sept 1 1994 TIDMARSH supra note 97 at 79782 On claimsresolution facilities generally see Mark A Peterson Giving Away Money Comparative Comments on Claims Resolution Facilities 53 LAWampCONTEMP PROBsAutumn 1990 at 113 114721 240 See Amchem 521 US at 624 622725 emphasizing that even if Rule 23b3 s commonality requirement could be met by a showing that each of the class members had been exposed to defendant s asbestos products the predominance criterion is far more demanding 241 See swra notes 227731 and accompanying text 242 See swra note 231 and accompanying text 2009 Rethinking Adequacy of Representation 1195 can be made thus the incentives to provide sufficient information are aligned properly Finally with regard to litigation that has matured before class certi cation is sought243 data from which to make the calculations are available Nonetheless to the extent that the do no harm calculation is excessively costly it dooms class treatment A central criterion for any class action that operates independently of the do no harm principle is that the class action achieve greater efficiency than individual litigation244 But it is important to note that the criticism of costliness is not peculiar to the do no harm principle Any principle to determine adequacy of representation en tails costs of administration and costs of erroneous determinations The questions therefore are whether the do no harm approach creates marginally greater costs than other adequacy formulations do and whether those marginal additional costs if any outweigh the bene ts of the do no harm approach in relation to the bene ts of those other approaches As I have described do some good or equal gains for equal claims ap proaches can be more costly in terms of implementation and information gathering 5 and the traditional no con icts of interest approach if rigor ously enforced leads to the certi cation and resulting elimination of harm of very few class actions The second criticism which is more substantial contains two related parts First it might be argued minimally that we should adopt another principle that is a Pareto improvement over the do no harm principle Second it might be argued maximally that we should adopt as the principle of adequate representation the requirement that the class representative and class counsel maximize the value of the class s claim On the rst minimalist criticism it is possible to posit other adequacy ofrepresentation principles that might be Pareto improvements over the do no harm principle One possible principle is this the class representative and class counsel must achieve from the class action the best net result for each class member For example class representatives and class counsel are inadequate if they agree to a settlement that provides less recovery to some class members than the members expected recovery after a classaction trial247 Such a principle is not however a Pareto improvement over the do no harm principle in all circumstances if both the class settlement and the net expected class recovery at trial are less than a class member s net 243 See 5147M note 126 244 See 5147M note 78 and accompanying text 245 See 5147M text preceding note 23239 mpra note 233 and accompanying text 246 See 5147M Part II 247 See Reynolds v Bene cial Nat l Bank 288 F3d 277 284785 7th Cir 2002 stating that judges should quantify the net expected value of continued litigation to the class since a settlement for less than that value would not be adequate 1196 Texas Law Review Vol 871137 expected recovery from individual litigation this principle is not more ef cient A different principle that appears to be a Pareto improvement is this the class representative and class counsel are adequate representatives of a class member if and only if they act in such a way that they obtain for that class member a net expected recovery that is at least as good as the recovery that the class member could obtain from the best available method other than the present class action for resolving the case In effect this too is a do no harm principle but the baseline against which harm is measured is not indi vidual litigation but rather all other possible methods by which the case might be resolvediincluding multidistrict litigation consolidation and even competing class actions led elsewhere2 First although this principle sounds like a Pareto improvement over the do no harm principle in some circumstances it is not the principle can lead to a nding of inadequacy and hence no class treatment even though class treatment would be the most ef cient result249 Second the dynamics of classaction litigation which I have previously described are suf cient in many cases to push a judgment or settlement in a direction that is Pareto su perior to the position the class members would occupy under the do no harm principle 0 Third the reason that I chose individual litigation as the baseline against which to measure Pareto improvementsias opposed to an other baseline such as the best alternative other than the present class 248 I am grateful to Samh Lawsky for the precision with which she stated this principle 249 Consider the hypothetical situation in which the defendant holds a 1 million rnd against which 100 claimanw have identical 20000 claims Assume as Well that eighty of the claimants have present claims the other twenty claims having not yet matured that the claims involve a fedeml question and all eighty claimanw le in federal court Finally assume that there are three possible Ways to adjudicate the dispute 1 Individual actions in which each plaintiff has a 40 probability of success and each case involves 7000 in fees and costs incurred by claimants only if the case is successful 2 a multidistrict MDL proceeding in which the eighty present claimants are consolidated for pretrial purposes the probability of success on each claim rises to 75 and the perplaintiff expected fees and cosw incurred only if the case is successful are 420039 and 3 a mandatory class action of all 100 claimanw in which the probability of success is 75 and the per plaintiff expected cosw and fees incurred only ifthe case is successful are 3000 In this case the net expected recovery in individual litigation is 5200 20000 gross recovery less 7000 in expenses discounted by the 04 probability The net expected recovery per claimant in the mass joinder action is 6225 12500 gross recovery less 4200 in expenses discounted by the 075 probability The net expected recovery per claimant in the class action is 5250 10000 gross recovery less 3000 in expenses discounted by the 075 probability On these facw the class action does harm in relation to the massj oinder option39 the class representative and class counsel therefore cannot adequately represent the class under the do no harm compared to other methods principle The problem however is that the MDL approach is inef cient in relation to the class action approach Firsg it creates a risk of harm either to the absent twenty claimants if the MDL approach renders the defendant insolvent or to the defendant if the defendant is called upon to make good on the twenty remaining 20000 claims Second the cost of obtaining judgment in the MDL situation is 336000 4200 per plaintiff multiplied by eighty plaintiffs a less ef cient result than the 300000 3000 per class member multiplied by 100 class members cost under the classaction approach 250 See rwra notes 235739 and accompanying text 2009 Rethinking Adequacy of Representation 1197 actioniis the orientation of our joinder system toward individual control as the default litigation position251 The same orientation exists in the Mathews V Eldridge formulation of due process The constitutionality of any departure from adversarial process is measured against the outcome achieved in indi vidual litigation not against other secondbest alternatives252 It is perhaps a trite but nonetheless accurate observation that adequate representation is not perfect representation and we have always measured adequacy in rela tion to the opportunities that a litigant might enjoy in a separate lawsuit Fourth the majority of class actions are Rule 23b3 actions and Rule 23b3 requires as a condition of certi cation that class treatment be superior to other available methods for fairly and efficiently adjudicating the controversy 253 Nothing in this language suggests that the b3 class action must make the position of each class member better in relation to secondbest alternatives254 Conversely one factor that is relevant in determining superiority is Rule 23b3A which provides that a court can consider class members interests in individually controlling the prosecution of separate actions 255 Thus the idea that a class action must not worsen the interests of class members in relation to individual liti gation is built into the superiority analysis in a way that the idea of not worsening the position of class members in relation to secondbest alternatives is not The second maximalist criticism of the do no harm principle is to attack its inefficiency in relation to another possible adequacy principle a principle that the constitutional duty of class representatives and class coun sel is to maximize the value of the claim of the class and to ignore the harm to the positions of individual class members completely This principle re quires representatives and counsel to pursue the Paretooptimal outcome as reconf1gured by the KaldoriHicks re nement Admittedly the do no harm principle does not require the class representative or class counsel to engage in actions that maximize the value of the claims of the class as a whole From a utilitarian perspective this fact is problematic The logical conclusion of utilitarianism is to maximize the good In theory one action achieves that maximum and can therefore be regarded as ethically superior to any other action The do no harm principle stops short of requiring that 251 See rqpra subpart 1A 252 See rqpra note 194 and accompanying text 253 FED R Crv P 23b3 254 In effect the superiority analysis of Rule 23b3 operates like a principle of Pareto superiority but with the KaldoriHicks re nement It requires that a class action be a Pareto improvement over alternative methods of recovery but it does not require that the bene ts of that improvement be spread across all members of the class so that no class member is less Worse off the member would be under the secondbest alternative If it Were otherwise the superiority requirement would defeat some class actions that Were more ef cient than the secondbest alternative 255 FED R Crv P 23b3A 1198 Texas Law Review Vol 871137 action and therefore cannot be regarded as the ethically superior rule Nor does the principle lead to the greatest economic ef ciency But this criticism can be leveled against most of the law including the law of joinder and the law of class actions Individual control of litigation under Rule 20 does not necessarily lead to maximum social utility in every case More to the point class actions under Rule 23b1 and b2 which contain no superiority requirement will not achieve the maximum social utility in every case a measure of adequacy requiring wealth maximization would prevent such class actions from being certi ed Indeed if pursuing the most ef cient outcome were the constitutional baseline for measuring adequacy then all class representation save for the single wealth maximizing strategy must be deemed inadequate Mathews V Eldridge s formulation of due process is not so stringent it does not require wealth maximizing procedure but rather holds that any procedure that is a Pareto improvement over adversarial process is constitutional Moreover by forc ing the class representative and class counsel to adopt a wealthmaximizing strategy which might not allow them to capture for themselves some gains associated with class treatment one incentive for representatives and counsel to seek certi cation is reduced possibly reducing the effective level of deterrence that class actions can achieve As I have described the ef ciency requirements of Rules 23ali 3257 the superiority requirement of Rule 23b3258 and the dynamics of classaction litigation259 already do the heavy lifting of maximizing utility The do no harm principle also works to promote ef ciency to a degree It prevents backsliding toward less ef cient solutions due to the actions of self interested class representatives and class counsel who seek to improve their own positions by causing greater harm to others The point of the principle is not to maximize wealth directly but to check sel sh behavior by those who are not committed to maximizing the class s wealth or otherwise caring for their interests The do no harm principle does not prevent class represen tatives and class counsel who wish to do so from maximizing class wealthi as long as the consequence of doing so is not visited on a few whose posi tions are made worse The principle respects the substance if not the form of individual control on which American society sets a high value Finally by not in exibly requiring the pursuit of the single path of wealth maximization the do no harm principle allows class representatives and class counsel some latitude of action without raising the fear that every 256 The harms that Rules 23b1 and b2 protect against are not necessarily harms in an economic sense For instance in the limitedfund context of Rule 23b1B it is a matter of indifference from the viewpoint of deterrence and ef ciency Whether the fund is given only to the early claimanw or instead is spread equitably amon all claimanw A noclassaction alternative leads to the former result and the 23b1B alternative leads to the latter 257 See 5147M note 78 and accompanying text 258 See 5147M notes 147749 and accompanying text 259 See 5147M notes 235739 and accompanying text 2009 Rethinking Adequacy of Representation 1199 action they take will result in a challenge to their constitutional adequacy Adequate representation does not require optimal representation 4 Alternative SolutionsiA nal criticism of the do no harm principle is the possible availability of other mechanisms or principles that might achieve greater utility at less cost I have already examined a few al ternatives for de ning adequate representation such as a do some good principle and an equal gains for equal claims principle and found them lacking260 In its Principles on the Law of Aggregate Litigation the American Law Institute ALI has created a menu of solutions for achieving adequate representation Among its suggestions are control of litigation decisions by named parties with sizeable stakes duciary duties appointment of competent counsel nancial incentives and subclassing and other casemanagement techniques 261 Using the vocabulary of the ALI the do no harm principle can be regarded as a duciary duty for the class repre sentative and an ethical obligation of competent counsel But the generality of the ALI s suggestions renders them less than helpful in creating speci c potential alternatives to the do no harm principle 2 Hence I consider sev eral speci c alternatives to the do no harm principle that meet the general guidelines of the ALI None are superior to do no harm adequacy a Reconceptualizing the Nature of the Class ActioniAn option for dealing with the inevitability of con icting individual interests that sometimes appears in the popular literature is to reconceive the nature of the class so that it is no longer seen as an amalgam of selfinterested individuals but rather as an organic entity with its own interests distinct from those of the members of the class 3 The class representative and class counsel would then be seen as having duciary duties to represent this gestalt class interest rather than the interest of individuals within the class The problem with this approach is that it still does not tell a class representative or class counsel how to behave or tell the court how to measure adequacy The apparent albeit not certain corollary of a class as clien theory is an ethical requirement that the class representative and class counsel work to maximize the utility of the class as a whole As we have 260 See swra notes 232734 and accompanying text 261 AGGREGATE LITIGATION supra note 6 105c These suggestions are intended to apply both to class actions and to nonclassaction litigation As the dra recognizes however the ability to impose an adequacyofrepresentation requirement by law is o en possible only in class actions and similar representational litigation 1 cmt c 262 I have already treated one of the few speci c suggestions of the ALIisubclassingiand found it Wanting as a suf cient control over the reality of selfinterested behavior by the class representative and class counsel See supra notes 110714 and accompanying ext 263 For one exploration of this issue see generally David L Shapiro ClassActions The Class as Party and Client 73 NOTRE DAME L REV 913 1998 1200 Texas Law Review Vol 871137 seen there are numerous difficulties with adopting a constitutional requirement that only one set of actions can ful ll 4 The model does not solve the problem of the selfinterested class representative or class counsel There is no reason to believe that selfinterested class representatives and class counsel will protect the interests of this organic entity any more than they will protect the interests of absent class members Unless class repre sentatives and class counsel are invariably altruistic actors or wealth maXimizersiand if they are we would not be in the present conundrumi some class representatives and class counsel will still look out for their self interests when those interests diverge from those of the class 17 Designating an Overseer of the Class s InterestsiIn a prior draft of Principles on the Law of Aggregate Litigation the ALI suggested as a means of ensuring adequacy the appointment of someone to oversee the class representative and class counsel and thus to ensure that they are repre senting the interests of absent class members 5 An evident dif culty with this approach is nding the appropriate guardian of the class members interests For obvious reasons this overseer cannot be class counsel It is precisely the selfinterest of class counsel that often inspires the need for a doctrine of adequate representation In looking elsewhere for an overseer to save the class from a self interested class representative and class counsel an obvious candidate is the judge who could be charged with being especially solicitous of the interests of the absent class Sometimes the judge s role has been conceived in such terms but judges understandably resist this approach In the rst instance they lack the information or institutional capacity to police selfinterested behavior by the class representative or class counsel In the second instance this model of judicial behavior fundamentally changes the nature of the judi cial function in an adversarial system A judge cannot be both a duciary for class members and an impartial adjudicator of their claims Realizing this a judge might look elsewhereito guardians ad litem for instanceifor someone to represent the interests of absent class members The literature on the performance of guardians ad litem is not however en couraging in terms of their ability to protect those whom they represent Moreover we need to assume that guardians ad litem are altruistically inter ested in advancing the aims of the class members they represent not self interested in their own fees or reputation Finally a guardian turns the idea 264 See swra note 256 and accompanying text 265 See PRINCIPLES OF THE LAW OF AGGREGATE LITIGATION 106b5 Discussion Dra 2006 including judges participants other litigation managers and third parties as possible overseers 266 See Thomas A Smith A Capital Markets Approach to Mass Tort Bankruptcy 104 YALE LJ 367 389791 1994 recounting the story of the Mannville reorganization Where the representative of future claimanw was mostly unrnonitored and brokered a deal that effectively le the future claimanw with nothing 2009 Rethinking Adequacy of Representation 1201 of Rule 23a on its head One of the requirements of Rule 23a designed to ensure adequacy of representation is that the class representative must be a member of the class267 and the guardian is not In any event reconceiving the roles of class counsel judge or guardian ad litem assumes that the designated overseer can decipher the interests of the class and employ a metric to determine when those interests are ade quately represented Without a metric oversight seems futile or at least will result in oversight among class actions as widely disparate as the measure of a chancellor s foot With a metricisuch as the do no harm principlei there is no need for complex institutional arrangements the judge aided perhaps by a traditional adjunct such as a magistrate judge or master can determine adequacy directly 0 Continual Opt Out RightsiA third solution is to allow class members a continual right to opt out of a class action Optout rights are rarely invoked 8 so there is still the realistic concern for selfinterested be havior in such a setting Optout rights are expensive at least if we are serious about providing notice to class members at every stage at which class members might wish to opt out Permitting optouts also reduces the preclu sive effect of a class action thus spawning satellite litigation A general opt out right would signi cantly restructure the present Rule 23 which allows in almost all cases an optout right only in b3 class actions269 Finally once class members have opted out the very harms that class actions are in tended to prevent to the class representative the defendant the class members or society can occur d Opt In RequirementsiA fourth solution is to require class members to opt in Class actions consist only of those members who af rmatively choose to opt into the class270 At a theoretical level this solu tion avoids all of the concerns for selfinterested behavior of class actions an optin model is an exercise of a litigant s autonomy akin to joinder under Rule 20 and thus any failings of the class representative and class counsel to 267 See FED R CIv P 23a One or more members of a class may sue on behalf of 268 See WILLGING ET AL mpra note 51 at 52 5253 The median percentage of members Who opted out was either 01 or 02 ofthe total membership ofthe class and 75 ofthe optout cases had 12 or fewer class members opt out 269 See 5147M note 54 and accompanying text 270 This is a return to the spurious class action idea that predated the present Rule 23b3 which instead set the default as an optout rule Owen Fiss and John Bronsteen are modern proponents of an optin solution See John Bronsteen Class Action Settlements An Opt1n Proposal 2005 U ILL L REV 903 906 proposing that classaction settlements which are currently binding on any class member Who does not expressly optoug should instead be binding only on those Who explicitly opt into the settlement Bronsteen amp Fiss mpra note 55 at 1453 suggesting a chan e in classaction rules that would require class members to consent to the settlement before it would become binding on them 1202 Texas Law Review Vol 871137 protect class members interests can be treated as a waiver by the class member of individual rights At a practical level however an optin strategy gets even less preclusive effect than an optout strategy and increases the likelihood and scope of the potential harm from multiple lawsuits It can re quire an eXpensive notice campaign Moreover the concern for self interested behavior by class representatives and class counsel does not disap pear in an optin class action the doctrine of waiver simply ignores the problem271 IV Conclusion Colleagues who have heard my proposal have sometimes asked whether the do no harm measure of adequate representation will lead to more or fewer class actions To some the principle seems likely to lead to certi ca tion of fewer class actions with the undesirable result that more widespread wrongdoing by large entities will go undeterred and more victims will remain uncompensated To others the principle seems likely to lead to more class certi cations both because it replaces an unworkable identityofinterests approach with something more exible and because it might have the spill over effect of making courts willing to rein in some of their recent hostility to b3 class actions It seems out of place in an Article that has stressed a consequentialist approach to the adequacy problem to answer this question by saying I don t know and I don t care The principle is right regardless of its consequences So my rst inclinationito say that adoption of the do no harm principle ensures that those class actions that are certi ed will have the bene cial consequence of increasing social welfareidodges the question My second inclination is to believe that the principle is unlikely to have a signi cant effect on the number of class actions led Even though class actions inherently place people with con icting interests into a single class272 class actions are frequently certi ed That fact suggests that courts are already nding perhaps subconscious ways to reconcile the adequacy requirement with the presence of con icts of interest Indeed the do no arm principle might well be the rule of thumb already operating in some courts Elsewhere the operative rule of thumb is probably more restrictive than the do no harm rule in some courts and less restrictive in others In global terms therefore the adoption of a do no harm principle is probably a wash One of the principal advantages of replacing these rules of thumb with the do no harm principle is the transparency of an abovethetable rule that can replace a bevy of uncertain and unknown rules by which individual judges likely measure adequacy of representation today The do no harm 271 See 5147M note 151 and accompanying text 272 See 5147M Part II 2009 Rethinking Adequacy of Representation 1203 principle is the type of simple fair rule that makes all of Rule 23 into a pull harness to achieve the ef cient handling of mass litigation and the simulta neous reduction of harm to class members to defendants and to society If we employ it we will come closer to having the right number of class actions whether that number is more or less than the number of class actions today
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