Analysis: Duplicative Class Action Litigation
Class Action Watch Winter 2002
January 1, 2002
A number of legal scholars have concluded that duplicative class actions - that is, two or more class actions filed on behalf of the same class (or overlapping classes) that present claims arising out of the same set of operative facts - threaten to undermine the very goals of fairness and efficiency that class actions were intended to serve. Indeed, the Civil Rules Advisory Committee is currently considering proposals to amend Rule 23 in order to curb the abuses associated with duplicative class actions: wasted resources of courts and defendants, forum shopping, and "sweetheart" settlements that enrich plaintiff lawyers rather than compensate class members. Abundant anecdotal evidence, together with limited empirical research such as that conducted by the RAND Institute, suggests that the problems associated with duplicative class actions are rampant.
We knew of no effort, however, to survey companies in depth about the nature and extent of the problem of duplicative class actions. As part of our ongoing effort to make useful data on class action litigation more generally available, we decided to undertake the task of surveying companies about their experiences with duplicative class actions. We are pleased to unveil the results of this survey effort. The analysis that follows highlights data that may prove especially useful as the Advisory Committee and possibly Congress prepare to assess proposals for class-action reform.
A Review of the Project
The first step in our project, of course, was to devise a reasonably thorough survey that companies could readily and easily answer. Toward that end, we formulated a one-page questionnaire asking companies to indicate, for the years 1990 through 2000:
- The number of times they encountered duplicative class actions, including the number of instances in which such actions were filed only in state courts, only in federal courts, in both state and federal courts, and by the same plaintiff lawyers;
- The largest number of duplicative class actions encountered in any one set of filings arising out of the same set of operative facts;
- The number of instances in which a court denied class certification and the plaintiff then filed another class action arising out of the same set of operative facts;
- The number of times in which class actions re-filed after an initial denial of certification resulted in successful certification, the denial of certification, or settlement before certification; and
- The three state court systems in which companies most commonly found themselves defending duplicative class actions.
We then mailed the survey last fall to 75 Fortune 500 companies that have demonstrated a general interest in the litigation process as evidenced by membership in more than one organization that monitors litigation reform. The survey pool and respondents represent every conceivable industry - transportation, energy and utilities, pharmaceuticals, banking, insurance, heavy and light manufacturing, telecommunications, and a wide range of durable and non-durable consumer goods production. As of the printing of this issue, 24 companies responded by returning surveys (a 32 percent response rate). Given the size of these companies and the logistical difficulties of responding to the survey (which required companies to sort through ten years of litigation), we were quite satisfied to have secured such participation in this project.
For a number of reasons, we believe that the pool of respondents reflects a rather diverse collection of experiences with duplicative class actions. For one thing, the responding companies are not merely those particularly affected by duplicative class actions. A number of respondents reported no such actions (or a very small number) during the years in question, while others posted more significant numbers. The median and mean numbers of duplicative class actions reflect this distribution. At a minimum, then, this survey usefully documents the experiences of two dozen major American companies, representing a diverse array of business interests, with duplicative class actions.
That said, we note that this survey effort is not a comprehensive scientific sample or a detailed empirical analysis. The data helps increase our understanding of the incidence and magnitude of duplicative class actions, and provides a useful framework for further dialogue. Perhaps most meaningfully, the data we have collected points toward areas where further examination may prove especially useful as policymakers attempt to grapple with this complex litigation phenomenon.
What follows is a summary of the most meaningful information we were able to garner from the surveys that were returned. We did not consider it appropriate to report on issues or questions unless virtually all of the respondents provided data. Therefore we do not discuss any of the data regarding the re-filing of class actions arising out of the same set of operative facts, as the respondents simply provided too few answers to this set of questions. Moreover, we purposely avoided reaching any definitive conclusions with respect to the data collected. Readers can decide for themselves whether the survey results indicate that duplicative class actions are a problem in need of a remedy, and if so, which remedy is most appropriate.
The Incidence of Duplicative Class Actions
We began our survey by asking respondents to indicate the number of instances between 1990 and 2000 of "'shotgun' filings, i.e. claims growing out of the same set of operative facts that were filed on behalf of the same plaintiff in two or more jurisdictions at or around the same time." We also asked respondents to "indicate the number of times the same plaintiff lawyers brought two or more of the class actions included within a set of shotgun filings growing out of the same set of operative facts." Respondents were also asked to specify whether the duplicative class actions were filed (1) only in state courts, (2) only in federal courts, or (3) in both state and federal courts.
The companies that responded to this question reported a total of 465 sets of shotgun filings during the 11 years surveyed, yielding a range from 1 to 225 sets, a mean of 24 sets, and a median of 11 sets (among companies responding). It is important to bear in mind that each "set" represents a number of class actions arising out of the same set of operative facts. At a minimum, this data suggests that companies engaged in a variety of commercial pursuits are not infrequently faced with the problem of "overlapping" or "competing" class actions.
With respect to the breakdown of filings according to jurisdiction, we found that approximately 36 percent of duplicative class actions were filed in state courts only, 42 percent were filed in federal courts only, and 22 percent were filed in both state and federal courts. It is important to note, however, that a single respondent accounted for 225 instances of duplicative class actions, with 65 of these filed only in state courts and 160 filed only in federal courts. When that respondent's numbers are excluded from the data, the jurisdictional "snapshot" alters rather dramatically to show that 43 percent of the duplicative class actions were filed in state courts only, 16 percent were filed in federal courts only, and 41 percent were filed in both federal and state courts. This data underscores the concentration of duplicative class actions in state courts, which have no means of consolidating interstate class actions and often apply less stringent certification standards than federal courts. The percentage of duplicative class actions filed in both state and federal courts may also reflect exploitation of federal courts' lack of power to consolidate parallel state proceedings or enjoin class members from bringing "copycat" class actions in state courts.
As to our query about the number of instances in which the same plaintiff lawyers participated in two or more filings within a set of duplicative class actions, the responding companies reported a total of 116 such instances over the relevant period, with a range from 1 to 21 instances, and a mean and median of 6 (among companies responding). Thus, 25 percent of all duplicative class actions reported by the respondents involved filings by the same plaintiff lawyers in class actions arising out of the same set of operative facts. This data tends to discount any notion that the proliferation of duplicative class actions can be blamed solely on lack of coordination among class counsel; to the contrary, the relatively high percentage of duplicative class actions involving the same plaintiff lawyers suggests, at a minimum, the existence of forum shopping.
The Magnitude of Duplicative Class Actions
In addition to the frequency with which companies encountered duplicative class actions, we were also curious about the magnitude of such actions. We therefore asked companies to relate the "the largest number of class actions filed against you that were included in any one set of filings growing out of the same set of operative facts." The companies that responded to this question reported a mean of 24 class actions filed in a single "set," with a median of 10 and a range from 1 to "over 100." Strikingly, 25 percent of the responding companies had defended more than 20 class actions arising out of the same set of operative facts, while half of these companies, in turn, had defended more than 70 class actions in a single set of filings.
These numbers indicate that the exposure of companies to duplicative class actions is not merely frequent, but frequently of significant magnitude. The data makes concrete the problems of redundancy and waste of resources more generally invoked in most discussions of duplicative class actions. In sum, the data elicited by this question should help readers assess for themselves the magnitude as well as the frequency of duplicative class actions.
The Source of Duplicative Class Actions
Finally, we were interested in discovering whether particular jurisdictions tended to attract duplicative class actions. To this end, we asked companies to identify the "three court systems [in which they] most commonly find [themselves] presented with copycat class actions." Not surprisingly, the most commonly listed state courts were California, Texas, and Louisiana, followed closely by Illinois, and Mississippi. Several respondents listed Alabama and Florida as frequent sites of duplicative class actions, with New York, Ohio, and Pennsylvania each receiving a mention.
This data comports with that gathered in our first class-action survey, conducted in 1999, that reported that 69 percent of class actions were filed in just five jurisdictions: Alabama, California, Louisiana, Ohio, and Texas. Thus it appears that a relatively small number of states continue to be magnets for class actions in general, and duplicative class actions in particular.
The survey responses discussed herein provide insight into the experience of major companies with duplicative class actions. We make no claim that the responding companies are representative, but nevertheless believe that the data collected by this survey provides some much-needed empirical evidence of the nature and extent of the problems of duplicative class actions faced by American businesses. We hope that this effort will assist our readers in making their own judgments about the wisdom and necessity of the various class-action reforms currently under discussion.