GBS and the Trouble with Class Actions

For the last few weeks, James Grimmelmann has been the go-to source for news and analysis of the Google Book Search case. In a recent post, he takes an in-depth looks at the various parties who have sought to intervene in the case. Two organizations, the American Society of Media Photographers and the National Writers Union, have objected to the way the plaintiff class—that is, the set of all book copyright holders who are registered in the US—is being represented. They want “new negotiations with the many voices that have up to now been excluded.”

Grimmelmann argues that as a matter of class action theory (governed by “Rule 23”) these parties are not entitled to a seat at the table. Either they’re in the class, in which case they’re officially represented by the pair of law firms that represent the class as a whole, or they’re outside the class, in which case their rights are not affected by the settlement. If they’re in the class, they’ll have a right to object to the new deal once it’s unveiled. But Grimmelmann explains why, theory aside, parties who don’t get a seat at the table are unlikely to be satisfied by a right to object after the deal is announced:

Game theory favors the agenda-setters. Those who draft the settlement can pick exactly what it says; that enables them to select the terms that most favor themselves. Objectors, at best, have a shot at convincing Judge Chin to reject the settlement. Even Judge Chin’s veto power is a crude tool; he can’t sculpt the details of the settlement with it. If you get a seat around the negotiating table, you have a lot more ability to pull the settlement in the direction that you want. This, by the way, is one of the reasons I believe that the settlement requires searching review. Its proponents are the ones who picked each and every detail; the approval process should be designed to give them an incentive to get as many details as possible right, rather than the bare minimum.

I think this analysis is spot on. And I’m inclined to reach a somewhat stronger conclusion than he does: the danger that class counsel will negotiate the rights of some class members away for the benefit of other class members is so large that courts just shouldn’t approve classes as large and heterogenous as this one.

The class action mechanism is supposedly justified as a matter of administrative efficiency: if you’ve got a bunch of plaintiffs who’ve all been injured in similar ways, it’s inefficient to have each of them go through largely the same procedure to reach largely the same outcome. But this rationale only makes sense if we have some confidence that the class action mechanism will produce an outcome roughly comparable to what individual lawsuits would have produced. As the plaintiff class gets larger and more diverse, it becomes more and more likely that the outcome will be driven by the details of the class action mechanism rather than the underlying legal issues in the cases.

In this case, there’s no doubt that the class action mechanism is affecting the substantive outcome because one of the factors commonly cited in favor of the settlement is that it ropes thousands of orphan work authors into the settlement. This strikes me as inherently abusive of the class action mechanism. By definition, holders of orphan works can’t sue on their own behalf, and it’s not clear how you’d go about appointing a lawyer to represent their interests. Almost by definition, the settlement expropriates orphan work holders for the benefit of the other plaintiffs.

This might seem like procedural nitpicking, but I think it points to a deeper problem with using the class action mechanism in this fashion. There probably isn’t any one agreement that will satisfy most members of the proposed plaintiff class. Regardless of how you structure the negotiations, some class members will get a raw deal. And I don’t think it’s ever appropriate to short-change the rights of some plaintiffs in order to reach an outcome we might regard as desirable on policy grounds.