Future Conduct and the Limits of Class-Action Settlements – James G.
Élan Vital 2013-05-20
The coruscating James Grimmelmann recently published a crisp, clean exorcism of “future conduct” releases in class action suits, in the North Carolina Law Review. Using a number of recent class actions as motivation, including the Google Books case, he patiently and eloquently dissects the ideas behind such carte blanche releases, and the rare cases in which they might be called for.
This is a gem of a monograph – worth reading even if you are not a copyright geek.
From the opening salvo (emphasis mine):
This Article identifies a new and previously unrecognized trend in class-action settlements: releases for the defendant’s future conduct. Such releases, which hold the defendant harmless for wrongs it will commit in the future, are unusually dangerous to class members and to the public… [F]uture-conduct releases pose severe informational problems for class members and for courts… create moral hazard for the defendant, give it concentrated power, and thrust courts into a prospective planning role they are ill-equipped to handle.
Courts should guard against the dangers of future-conduct releases with a standard and a rule. The standard is heightened scrutiny for all settlements containing such releases; the Article describes the warning signs courts must be alert to and the safeguards courts should insist on. The rule is parity of preclusion: a class-action settlement may release future-conduct claims if and only if they could have been lost in litigation. [...] The Article concludes by applying its recommendations to seven actual future-conduct settlements, in each case yielding a better result or clearer explanation than the court was able to provide.
If you’re in a hurry and don’t have time to savor all 90 pages of finely referenced background and analysis, a handy comparative timeline is on p.410, the standard and rule start on p.431, and the 7 brief case studies start on p.458.
via the Laboratorium.