Last week, in an opinion replete with gratuitous attacks on the entire class action process, the Seventh Circuit directed the district court to reverse an order granting class certification in a consumer false advertising case. Thorogood v. Sears, Roebuck & Co., ___ F.3d ___ (7th Cir. Oct. 28, 2008). The penultimate paragraph by itself would have been almost enough to explain the court's conclusion that the commonality element could not be met:
The difficulty of determining the relief to which the individual class members are entitled, though serious, is not the deal breaker. If it were proved that X thousand buyers of Kenmores had been deceived, a settlement that provided each with an amount equal to an estimate of the average damages they had sustained would be a sensible and legally permissible alternative to remitting all the buyers to individual suits each of which would cost orders of magnitude more to litigate than the claims would be worth to the plaintiffs. “Aggregate class proof of monetary relief may . . . be based on sampling techniques or other reasonable estimates, under accepted rules of evidence.” 3 Herbert B. Newberg & Alba Conte, Newberg on Class Actions § 10.3, p. 480 (4th ed. 2002); see also id., § 10.5; Stewart v. General Motors Corp., 542 F.2d 445, 452-53 (7th Cir. 1976); United States v. City of Miami, 195 F.3d 1292, 1299-1300 (11th Cir. 1999); Pettway v. American Cast Iron Pipe Co., 494 F.2d 211, 259-63 (5th Cir. 1974). The deal breaker is the absence of any reason to believe that there is a single understanding of the significance of labeling or advertising clothes dryers as containing a “stainless steel drum.”
Slip op. at 12. But no, the opinion includes several pages of fulmination against class actions—none of which was necessary to the analysis or the outcome. Id. at 3-6. For example, the opinion points out the "enhanced risk of costly error" presented by class actions, which
is asymmetric when the number of claims aggregated in the class action is so great that an adverse verdict would push the defendant into bankruptcy, for then the defendant will be under great pressure to settle even if the merits of the case are slight. In re Rhone-Poulenc Rorer, Inc., 51 F.3d 1293, 1298-99 (7th Cir. 1995); Hay, “ ‘Sweetheart’ and ‘Blackmail’ Settlements in Class Actions,” supra, at 1391-92; Barry F. McNeil & Beth L. Fancsal, “Mass Torts and Class Actions: Facing Increased Scrutiny,” 167 F.R.D. 483, 489-90 (1996). It is true that in principle and often in practice, shareholders whose shares in a particular company are part of a diversified portfolio of securities are indifferent to the fortunes of a particular stock in their portfolio. But corporate managers—-the shareholders’ imperfect agents—are not indifferent to bankruptcy and so they are unwilling to bet their company on the outcome of a trial. This, however, is not such a case, as the aggregate claims are well within Sears Roebuck’s ability to pay.
Id. at 5-6 (emphasis added). If that is so, why mention this issue at all? But what bothers me the most about this opinion is its assumption that class counsel are going to breach their fiduciary duties to the class:
But the class action device has its downside, or rather downsides. There is first of all a much greater conflict of interest between the members of the class and the class lawyers than there is between an individual client and his lawyer. The class members are interested in relief for the class but the lawyers are interested in their fees, and the class members’ stakes in the litigation are too small to motivate them to supervise the lawyers in an effort to make sure that the lawyers will act in their best interests.
The defendants in class actions are interested in minimizing the sum of the damages they pay the class and the fees they pay the class counsel, and so they are willing to trade small damages for high attorneys’ fees.... The result of these incentives is to forge a community of interest between class counsel, who control the plaintiff’s side of the case, and the defendants. The judge who presides over the class action and must approve any settlement is charged with responsibility for preventing the class lawyers from selling out the class, but it is a responsibility difficult to discharge when the judge confronts a phalanx of colluding counsel.
Id. at 3-4 (citations omitted) (emphasis added). Let's suppose, for the sake of argument, that there are some "class lawyers" who "sell out" every class they represent. Is there any evidence that the lawyers in this particular case are among them? The district judge evidently did not think so, as he found them adequate to represent the class members' interests and certified the class. Nor was their adequacy apparently challenged on appeal. So why use this opinion as a vehicle for this kind of attack? Why not simply analyze the commonality element and be done with it?
I have no problem with attacks on lawyers who have displayed actual dishonesty, but it is particularly unbecoming of a judicial panel to use a published opinion to gratuitously vilify half the profession. It calls the holding's very integrity into question.
Plaintiff-side class action attorneys constantly hear this refrain—that even though we are officers of the court, bound by the rules of ethics and under a fiduciary obligation to our clients, all of us going to breach those obligations in the most despicable way. I take it personally, and I am tired of it.
[Via How Appealing.]