From: New York Times Date: April 2, 2011 Author: Adam LiptakWASHINGTON - Can a class-action lawsuit be too sprawling to deliver old-fashioned justice?

Justice Antonin Scalia seems to think so, judging by his comments on Tuesday during the Supreme Court argument in the biggest employment discrimination class action in history.

"We must have a pretty bad judicial system," he said, reflecting on what he had just heard from a lawyer for hundreds of thousands of women suing Wal-Mart over what they say was unfair treatment on pay and promotions. The lawyer had said that a trial judge could rely on statistical formulas rather than testimony and personnel records to decide how much money the company would have to pay each plaintiff if it lost.

"Is this really due process?" Justice Scalia asked.

In other words, does the impersonality of the suit threaten its ability to be fair to each plaintiff and to Wal-Mart, the country's biggest private employer?

The mass production of justice through class actions can indeed test the limits of the role that courts play in society. But the enormous size of modern institutions, it has been argued, requires efficient, streamlined procedures like class actions to address their failures.

"We are in the domain of mass litigation in mass society, where the private lawsuit is a regulatory enterprise," said Samuel Issacharoff, a law professor at New York University.

"You need to have mechanisms of enforcement that correspond to the scale of the economic activity."

Suzette M. Malveaux, a law professor at Catholic University in Washington, agreed that class actions have an important role to play in many cases, particularly those involving fraud and discrimination.

"It's a balancing act between efficiency and fairness," she said.

The issue tends to divide lawyers and scholars along ideological lines.

Conservatives and business groups say class actions are a form of regulation through litigation and insert courts into matters better left to administrative bodies. Consumer and civil rights lawyers counter that without class-action treatment, grave but widely dispersed wrongs would never be addressed.

The day after the Wal-Mart argument, a prominent federal appeals court judge issued an opinion in a similar but smaller case, this one brought by about 500 women against Rolls-Royce.

How far class-action procedures "can be stretched is the issue in the gigantic class action against Wal-Mart now before the Supreme Court," Judge Richard A. Posner of the United States Court of Appeals for the Seventh Circuit in Chicago wrote for a unanimous three-judge panel, ruling against class-action treatment.

"The present case is not as big a stretch," he said, "but it is big enough."

Judge Posner said he was concerned about the due process rights of so-called absent class members: women who would be bound by the result in the case even though they had not volunteered for it and had no right to opt out and sue on their own. And he added that something more than a "mechanical computation" was needed to decide who gets how much money should the women win. Rather, he said, the case would require "500 separate hearings."

Perhaps the most counterintuitive wrinkle in the typical class action is that only a handful of named plaintiffs have agreed to be represented by the lawyers who brought the case. Yet all of the class members will be held to the results those lawyers achieve.

"Ordinarily, you enforce your own rights," Professor Malveaux said. "Here, someone is representing you without your consent. We only allow that in exceptional circumstances."

She added that the Wal-Mart case qualified for the exception. "The idea of every woman coming forward and challenging their store manager is really unlikely," she said.

Richard Epstein, a law professor at New York University, disagreed, noting that the plaintiffs in the Wal-Mart case are suing over "decentralized personnel decisions" in thousands of stores.

"You want to wring your hands," he said. "This case is so crazy."

At the argument last week, some of the justices appeared sympathetic to the plaintiffs' complaint but wary about the courts' ability to handle so large a case.

"They think it's too difficult to administer a viable claim," Professor Epstein said of those justices. "I think it's too difficult to administer a wildly improbable claim."

Class actions can also distort the usual incentives in the adversary system, offering more rewards for lawyers than for plaintiffs. Sometimes lawyers win only very modest compensation for their clients - a coupon for a discount on the very product said to be flawed, say - even as they themselves claim handsome fees. But few observers contest that there are cases in which class actions perform an invaluable role.

"The place where they basically work well," Professor Issacharoff said, "is antitrust, securities and civil rights injunctions." In those cases, he said, the plaintiffs all suffered precisely the same harm from the defendant's actions. Often, the plaintiffs would have no incentive to file suits one by one but can obtain redress by joining together.

Roger H. Trangsrud, a law professor at George Washington University, catalogued what he called important class action successes in a 2008 law review article. The procedure has been used, he said, "to reform police practices, to obtain access to abortion services, to desegregate public schools, to improve prison conditions and to change abusive policies in mental institutions."

But those kinds of suits raise the separate issue of whether courts are intruding on areas better left to legislators and regulators.

"Using litigation to try and effect policy changes has always been controversial," said Deborah R. Hensler, a law professor at Stanford.

In 1997, rejecting an effort to settle the claims of "hundreds of thousands, perhaps millions" of people exposed to asbestos through a $1.3 billion class action, Justice Ruth Bader Ginsburg traced the history of attempts to bind together many claims in a single suit.

"Class-action practice has become ever more 'adventuresome' as a means of coping with claims too numerous to secure their 'just, speedy and inexpensive determination' one by one," she wrote, quoting from the rules governing class actions and commentary on them.

Some problems, she said, are too big for the courts and require Congressional action.

A court decision certifying a class (that is, permitting people to sue as a group) can in any event place enormous pressure on the defendant to settle, as Judge Dennis G. Jacobs of the federal appeals court in New York wrote in a 2001 dissent.

"Even a defendant who is innocent and holy may rationally choose to pay a few hundred million dollars in settlement of a class action rather than run the risk of ruinous liability," Judge Jacobs wrote.

The majority opinion in that case, which allowed millions of merchants to band together in an antitrust suit, was written by Judge Sonia Sotomayor, who would join the Supreme Court in 2009.

"The effect of certification on parties' leverage in settlement negotiations is a fact of life for class-action litigants," she wrote. "While the sheer size of the class in this case may enhance this effect, this alone cannot defeat an otherwise proper certification."

The case was settled for $3 billion.

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