Class Action Chaos? The Theory of the Core and an Analysis of Opt-Out Rights in Mass Tort Class Actions

From breast implants to cigarettes, mass tort class actions are a prominent and controversial part of the contemporary litigation landscape. A critical component of these actions is the ability of class members to “opt out” and thereby exclude themselves from the effect of any class judgment. The tension between individual autonomy and the desire for global resolution of mass controversies has led to an intense debate concerning the circumstances under which opt-out rights should be constrained, if at all. This Article makes five distinct contributions to the class action literature. First, the Article applies the game theoretic concept of the “core” to class action litigation. Core theory describes the conditions under which coalitions tend to be stable and provides a ready analogue to class litigation. The Article next demonstrates that global class resolutions often require that litigants\u27 bargaining strategies, including opt-out rights, be constrained in order to create a core. Third, the Article demonstrates that opt-out rights often do not serve their intended purpose and can act primarily to frustrate the resolution of complex claims. Fourth, the Article proposes the conjecture that a core theoretic model while simplified and reductionist, is sufficiently robust to generate essentially all of the problems observed in class litigation. Agency and other problems that have been at the heart of much class action scholarship certainly exist, but may not be analytically essential to an explanation of observed settlement and litigation patterns. Finally, core theory highlights an inherent paradox in class actions. In cases where claims for individual autonomy are strongest, opt-out rights are powerful bargaining tools that can destroy class actions and dramatically shift power within classes. In classes with traditionally weaker claims for preserving individual autonomy, opt-out rights may be both unnecessary and unlikely to disrupt class-wide resolutions. The recognition of opt-out rights in cases where it is feasible for litigants to exercise them can thus destroy the effectiveness of the class mechanism that serves as the foundation for those rights in the first instance. Individual autonomy may thus be fundamentally incompatible with obtaining global resolution in mass tort and other kinds of class actions