A HISTORY OF CONSUMER CLASS ACTIONS IN STATE COURTS

Most historians date the “modern” class action to the 1966 amendments to the Federal Rules of Civil Procedure. Yet, the class action or “representative suit” has a longer, unexplored history in the state courts. In the late 1930s and 1940s, a group of scrappy, first-generation lawyers tried to build their businesses by aggregating the small-sum claims of many consumers. The defendants in these cases were, for example, lenders who failed to comply with the technicalities of state disclosure mandates, and utility companies that charged consumers extra fees. Each consumer’s claim was small, but, as a group, the claims could yield a recovery large enough to make the case worthwhile for an entrepreneurial plaintiffs’ lawyer. State courts were not ready to embrace the consumer class action, however, for a few reasons. First, representative consumer suits threatened the professional identity of the organized bar. Class counsel came from the same ranks as personal injury attorneys, derisively labeled “ambulance chasers” by legal elites, and they similarly viewed litigation as a means to earn their fees. Both the bench and the elite bar disapproved of this approach. Second, representative consumer suits threatened the business community. Judges were sensitive to the objections of businessmen, who had been involved in writing some of the laws that class plaintiffs now sought to turn against them. Finally, past judicial decisions concerning representative suits did not favor allowing consumers to aggregate their claims, in the absence of some “common interest” among the plaintiffs or proof that the defendant had insufficient funds to pay all class members in full. In response to these concerns, state courts delayed the development of procedural devices that would have provided meaningful remedies for violations of substantive consumer rights. Without these remedies, substantive rights proved of more limited value. This history underscores the importance of effective enforcement mechanisms in consumer law, which typically pits numerous individuals with small-dollar claims against more sophisticated and well-resourced corporate defendants. It also shifts the narrative arc of consumer law’s history. Rather than a story of decline, in which the remedial promise of Federal Rule 23 was thwarted by contractual developments and judicial maneuvering in the 1990s and beyond, it becomes a story of reversion, in which judicial, legislative, and business hostility to class actions near century’s end caused the pendulum to swing back towards norms that had prevailed in state courts at the very beginning of the consumer class action era