February 26, 2005

Why federal court?

I was skeptical that last week's legislation shifting some class-action lawsuits from state to federal court was really as consequential as the politicos on both sides of the aisle made it seem. Are the federal courts really so much more hostile to class-action plaintiffs than the state courts are? And if so, should it bother us?

I still don't have any answers, but after asking around at the law school, I do have some more information.

First, it's unclear whether removing class-action lawsuits from state to federal court actually favors defendants. Some studies have shown that win rates drop significantly when a case is removed from state to federal court on diversity grounds. See Clermont & Eisenberg, 83 Cornell L. Rev. 581 (1998). The question is, why? The difference might be due to increased costs for plaintiffs, or to less favorable procedural rules. It may be due to a case-selection bias -- the plaintiff's strongest cases are settled, and the weakest claims are removed. We can't tell from win rates alone whether federal court is actually more favorable to class-action defendants.

But let's assume for the moment that federal court makes a difference. The most troublesome explanation for this would be that the federal courts are populated with less sympathetic judges. "Less sympathetic" being in this case a euphemism for "politically slanted towards corporate defendants."

It does make some intuitive sense that the federal judiciary might be more hostile to class-action suits. Since the presidency has been held by republicans for most of the past thirty years, and since right-wing presidents can be expected to appoint judges whose rulings tend to favor big business, we might expect that the federal judiciary would be less indulgent of class-action plaintiffs than the state judiciary would be.

Do we really want to say that the federal judiciary is politicized? I don't want to say it. If any judges are going to be making decisions based on their political leanings, I'd rather it be an elected state judge who favors in-state plaintiffs and who can (theoretically) be given the boot, than a tenured-for-life Article III federal judge.

I'd like to think that most all judges, state and federal, aren't overt politicos and don't decide more than a tiny fraction of their cases under the influence of their own political beliefs. I'm also sure that at the margin, a judge's political leanings do make a difference. (See, for example, criticism of Justices Thomas, Scalia, and all the rest except O'Connor in Johnson v. California, the racial-segregation-in-prison case.) The political leanings of the federal judiciary, though, seem to me unlikely to have any real impact on the outcome of most class-action lawsuits.

So I suppose my point is this: there's good reasons for believing that last week's legislation is not going to make a whole hell of a lot of difference. And if it does, the reasons for it are not likely to be ones that worry me a whole lot.

But, still...

Why does the corporate lobby seem so thrilled? And does passage of this legislation suggest that more pernicious legislation is on the way -- like a federally-mandated cap on noneconomic damages in malpractice suits?

With the kind of Congress we've got now, I never really stop worrying altogether.

Posted by Carey at February 26, 2005 08:12 PM

One practicing lawyer who thinks the federal court changes will be good rather than bad:

One practicing lawyer who thinks the federal court changes will be bad rather than good:

Posted by: Richard Campbell at February 27, 2005 12:45 PM