We read at the Mass Tort Litigation Blog about Professor Samuel Issacharoff’s forthcoming article on choice of law in class actions that will appear in the Columbia Law Review. Professor Issacharoff apparently argues that the enactment of the Class Action Fairness Act lends strength to the position that courts should apply a defendant-corporation’s home state law to the claims of all plaintiffs in a nationwide class action. We haven’t yet read the article, so we’re hesitant to comment on it. But not so hesitant that we won’t go ahead and comment anyway; heck, we’ve made fools of ourselves before and we’ll surely do so again in the future.
We have three uninformed reactions to the apparent thesis of this forthcoming article. First, as readers of this blog know, we don’t believe in applying the defendant’s home state law to the claims of all plaintiffs in a putative nationwide class action. As we’ve said in earlier posts, no one would think of applying that rule outside of the class action context, and the class action procedure is not supposed to alter substantive law. Moreover, if the defendant’s home state law governed all claims in nationwide class actions, then corporations would predictably reincorporate in states with more favorable laws. After most American corporations had reincorporated in states that, for example, forbid the recovery of punitive damages, everyone — plaintiffs’ lawyers included — might be unhappy with the unintended consequence of tinkering with the law.
Second, we’re not sure why the Class Action Fairness Act, which was heralded as a procedural reform to move class actions from state to federal court, necessarily says or implies anything about choice of law rules in class actions. As we said, we haven’t yet read Issacharoff’s article, so maybe we’re missing something, but it would take a heck of a good argument to persuade us that CAFA actually speaks to choice of law. (Frankly, given what we do for a living, we probably couldn’t admit publicly that we were persuaded, even if we were. But Issacharoff could take comfort in believing that, in our silent heart of hearts, he had convinced us.)
Finally, if CAFA truly somehow reinforces the need for a single body of law to govern nationwide class actions, why should it be the defendant’s home state law? Why not a single body of federal regulatory law — such as endorsing the doctrine of federal preemption and letting expert agencies draft regulations that apply nationally and displace state law? Now that’s a proposal for a unitary body of law that we can endorse, but it’s unlikely to satisfy the folks who file putative nationwide class actions for a living.
We are, as we said, writing sight unseen, and Professor Samuel Issacharoff may have answers to what we’ve written. Sam is, after all, a pretty smart guy, and he gets paid for thinking about these abstract issues; the two of us (nutcases that we are) simply blog about them in our spare time. But there’s plenty of room for argument here, and we’ll follow those arguments with interest.