The Rand Institute's Class Action Study

Class Action Watch Fall 1998
October 01, 1998

In May 1997, the Rand Institute for Civil Justice released a preliminary report on its study of class action litigation. The Study makes a significant contribution to the scholarship on class actions and to the ongoing effort to understand the scope of class action litigation and its impact on society and our judicial system.

The Institute's Study had its genesis in an effort to assist the Federal Advisory Committee on the Rules of Civil Procedure and other policymakers with their work in trying both to understand class action litigation and to recommend possible reforms. The project goals were to (1) build upon the Federal Judicial Centers 1996 study (AFJC Study) of class actions; (2) provide a more detailed picture of the current class action landscape and to suggest some implications of this landscape for rule changes; (3) systematically and objectively describe current litigation practices and to suggest some implications of the practices for rule changes; and (4) describe the consequences of class actions on individuals (as claimants, consumers and citizens), businesses, the economy, and society.

Using a multi-pronged search strategy, the Study turned to electronic databases to uncover information on the range of class action litigation pending during the period of July 1, 1995 to June 30, 1996. First, Rand identified databases that report class actions in some form and that were electronically searchable. Second, it developed algorithms for identifying records within these databases that refer to class actions, and screened these for references to specific cases. And, finally, the Institute eliminated duplicative references to the same case and tabulated information about case characteristics.

To supplement the Study's statistical findings and to learn about class action litigation practices, the Institute interviewed key participants in the litigation process from a broad array of interests, including plaintiff lawyers, defense counsel, public interest lawyers, and representatives from state attorneys general offices. In total, the researchers spoke with more than fifty people at thirty-four firms and organizations. The typical interview lasted for about two hours, although some lasted the better part of a day.

Rand reports on a number of findings with respect to the types of class action lawsuits that are typically filed. For example, it found that mass torts, which have featured prominently in the policy debate about class actions, account for a relatively small proportion of the opinions reported in the databases that were employed. In addition, Rand found that consumer cases account for a larger percentage of class action litigation than was previously observed in the FJC Study. Although the Institute qualified these findings by pointing out that it did not conduct a scientific sample of class action litigation, it states that virtually everyone . . . on both plaintiff and defense sides corroborated the finding that consumer cases are a big part of the activity in the class action context.

Given the prominence of consumer cases in class action litigation, Rand goes on to describe this category of cases in greater detail. Its preliminary report examines how the consumer cases are divided among four categories: fees, antitrust, fraud, and other consumer claims. The fees cases which involve a variety of claims dealing with charges by service providers are graphically depicted to be occurring with great frequency, and Rand states that this is consistent with the testimony that was collected.

The Rand Study also makes a number of findings that are similar to the results of the Federalist Society's survey effort. Specifically, Rand's Report describes an increase in the number of class action cases and identifies a possible trend towards more state court filings. Unlike the Federalist Society Study which took snapshots of class action litigation pending in three distinct years, the Institute's empirical data is limited to a one-year period, and, therefore, does not reveal any information about changes in class action activity. However, information gathered by Rand in the interview process corroborates the Federalist Society's data: class action litigation is growing dramatically. As the Institute reports, with few exceptions, all those we interviewed, on both the plaintiff and defense sides, told us that class action activity has grown dramatically over the past 2-3 years. Many respondents observed a doubling or tripling over the past several years. Moreover, everyone agreed that Arecent growth has been concentrated in state courts. This, too, is consistent with the Federalist Society's data.

The Rand Study notes that although there are a number of possible interpretations of the data they present, the Institute's own conclusion is that the landscape of class action litigation is shifting in some very significant ways, in response to social, economic, and legal forces. The Study goes on to note that a broader exposition of these forces as well as an assessment of the direct and indirect consequences of class actions are reserved for its final report, which is scheduled to be published later this year. Class Action Watch will report on its release and summarize its findings in a future issue.