The Device: A history and a possible future for class actions — Part 3: Contraction, adaptation, and the road ahead

I.      Introduction

Parts 1 and 2 of this series traced the historical evolution of class actions in the United States, from their equitable roots and codification in Rule 23 to their expansion and subsequent constriction through successive waves of judicial and legislative modification. In this final installment, we turn our attention to the post-2005 period – a transformative era shaped by (i) the federalization of class actions via Rule 23(f) and the Class Action Fairness Act of 2005 (“CAFA”); (ii) the Supreme Court’s increasingly stringent interpretation of the requirements of Rule 23; and (iii) the proliferation of class action waivers in arbitration clauses as a mechanism for hampering and eroding aggregate litigation. Taken together, these developments have reshaped the practical and doctrinal landscape for class actions, imposing new burdens on plaintiffs and reconfiguring the strategic terrain for defendants.

II.    The Post-2005 Landscape for Class Actions

CAFA and Rule 23(f) collectively transformed how and where class actions are litigated. CAFA expanded federal jurisdiction over class actions by relaxing the diversity requirements, making it easier for defendants to remove cases from state to federal court. This shift produced a significant migration of class actions into federal courts; empirical studies confirm a marked increase in both original federal filings and diversity-based removals post-2005.[1]

Simultaneously, Rule 23(f)—which permits interlocutory appeals of class certification decisions—has served a potent tactical tool, primarily for defendants. By allowing immediate appellate review of class certification orders, Rule 23(f) effectively raises the stakes of certification decisions and adds a layer of litigation that can delay proceedings and increase costs. Together, CAFA and Rule 23(f) have made federal courts the primary forum for class action disputes.

With more class actions in federal court and more class certification decisions being reviewed by appellate courts, federal courts have adopted new, more stringent standards applicable to plaintiffs seeking class-wide relief. As explained below, these rulings have affected multiple requirements for class certification. Moreover, class-wide arbitrations have been largely gutted by the expansion of class action waivers in arbitration agreements.

III.   The Supreme Court’s Tightening of Rule 23 Standards

Class certification is the “watershed event” in most class actions: whereas denial may leave a defendant potentially subject to liability for a single plaintiff’s claims, certification “subjects the defendant to potentially devastating aggregate liability, which increases the pressure to forge a settlement, even if the class claims are relatively weak on the merits.”[2] The Supreme Court’s key post-2005 decisions on class certification, detailed below, share a “common premise”: “the class certification decision is the defining moment in a class action, and thus a district court should not permit a class-wide proceeding to go forward unless the most exacting criteria are met.”[3]

A.   Heightened Evidentiary Burdens

The first theme in the Supreme Court’s post-2005 class action jurisprudence emerges from several cases where the Court made clear that district courts are required to resolve disputed issues bearing on class certification at the certification stage—even if they overlap with the merits.

Rule 23 defines the requirements for class certification, but it says nothing about whether those requirements must be satisfied by evidence (as opposed to by pleading). According to Professor Robert Klonoff, prior to 2001, “most courts permitted plaintiffs to seek class certification based on the pleadings or on only minimal evidentiary support.”[4] Then, in Szabo v. Bridgeport Machines, Inc.,[5] a 2001 decision authored by Judge Easterbrook, the Seventh Circuit held that not only were district courts allowed to resolve conflicting evidence at certification—it was required that they do so.[6] Courts thus had to decide the merits where the merits overlapped with the Rule 23 analysis.[7]

The Third Circuit agreed. In its 2008 decision in In re Hydrogen Peroxide Antitrust Litigation,[8] the court expressly “clarif[ied] three key aspects of class certification procedure”:

First, the decision to certify a class calls for findings by the court, not merely a “threshold showing” by a party, that each requirement of Rule 23 is met. Factual determinations supporting Rule 23 findings must be made by a preponderance of the evidence. Second, the court must resolve all factual or legal disputes relevant to class certification, even if they overlap with the merits—including disputes touching on elements of the cause of action. Third, the court’s obligation to consider all relevant evidence and arguments extends to expert testimony, whether offered by a party seeking class certification or by a party opposing it.[9]

The Supreme Court approved this interpretation in Wal-Mart Stores, Inc. v. Dukes,[10] explaining that “[t]he class determination generally involves considerations that are enmeshed in the factual and legal issues comprising the plaintiffs’ cause of action.”[11] According to the Court, Rule 23 does not impose “a mere pleading standard.”[12] Rather, the class representative must “be prepared to prove that . . . in fact” the certification requirements are satisfied.[13] There must be “rigorous analysis,” “significant proof,” and “actual, not presumed, conformance with Rule 23.”[14]

The Court reiterated this point in Comcast Corp. v. Behrend[15]—and made clear that this requirement for evidentiary proof applied to Rule 23(b) as well. Writing for the majority, Justice Scalia noted that plaintiffs must “‘prove that there are in fact sufficiently numerous parties, common questions of law or fact,’ typicality of claims or defenses, and adequacy of representation, as required by Rule 23(a) . . . [and] evidentiary proof [of] at least one of the provisions of Rule 23(b).”[16]

Wal-Mart’s emphasis on “rigorous analysis" and “actual conformance with Rule 23” raised the bar for class certification.[17] This higher evidentiary burden has resulted in significant front-loading of class action litigation, as now class representatives must have their evidence ready to go at certification, which in most cases requires longer discovery, delay, and greater expense.

B.   Heightened Scrutiny of Commonality

The Supreme Court’s decision in Wal-Mart also led to a massive shift in federal courts’ interpretation of Rule 23(a)(2)’s commonality requirement. The Supreme Court case arose from the Ninth Circuit’s certification of a nationwide class of approximately 1.5 million female Wal-Mart employees who alleged gender discrimination by their employer under Title VII of the Civil Rights Act.[18] The plaintiffs contended that Wal-Mart’s decentralized decision-making structure allowed local managers to exercise discretion in pay and promotions in a manner that systematically favored male employees, resulting in disparate impact.[19]

The Court reversed the Ninth Circuit’s certification in a 5-4 decision authored by Justice Scalia, holding that the class failed to satisfy Rule 23(a)(2)’s commonality requirement.[20] In so doing, the Court redefined the contours of commonality. Although the Rule’s text requires merely “questions of law or fact common to the class,” the Court rejected a literal interpretation, observing that virtually every class action involves some form of common question.[21] The proper inquiry, according to the Court, is whether there exists a “common contention . . . of such a nature that it is capable of classwide resolution—which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke.”[22]

Thus, Wal-Mart could be seen to shift the focus of Rule 23(a) from common questions to common answers: there must be a common issue in the case such “that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke.”[23]

Applying this framework, the Court found the Wal-Mart plaintiffs’ proffered evidence of a “common issue” insufficient to show commonality. First, the plaintiffs offered a sociological “social framework” analysis suggesting that Wal-Mart’s corporate culture was vulnerable to gender stereotyping.[24] However, because the plaintiffs’ expert admitted in a deposition that he could not quantify how many employment decisions might have been affected by this stereotyping, the Court concluded that his testimony lacked probative value and could “safely be disregarded.”[25]

Next, the plaintiffs argued that Wal-Mart’s policy of vesting discretion in local managers functioned as a common discriminatory policy that affected every class member.[26] The Court rejected this theory as insufficient to show commonality because the plaintiffs did not also identify a “common mode of exercising discretion that pervades the entire company.”[27] Without such a unifying mechanism, the Court concluded, it “[would] be impossible to say that examination of all the class members’ claims will produce a common answer to the crucial question why was I disfavored.”[28]

Lastly, the plaintiffs offered anecdotal evidence of gender discrimination from 120 employees relating to practices at 235 Wal-Mart stores.[29] The Court was unconvinced by this evidence, noting that the plaintiffs’ submission amounted to only “about 1 affidavit for every 12,500 class members.”[30] Such a sparse sampling, the Court concluded, “proves nothing at all.”[31]

Thus, the Court held that the plaintiffs did not present sufficient evidence of a single common question capable of generating a uniform answer for the class.[32] Because Rule 23(b) certification depends on satisfying Rule 23(a), failure to establish commonality was dispositive.[33]

As Professor Richard Freer observed in his analysis of Wal-Mart, “it is difficult to ignore how deeply the Court delved into evidence relating to the merits of the substantive claim—all to determine that the class failed to present common questions under Rule 23(a)(2).”[34]

Lower courts have widely understood the Court’s decision in Wal-Mart to raise the bar for commonality.[35] Indeed, several circuit courts have subsequently imposed exacting demands with respect to the required showing for commonality at the class certification stage.[36]

The Court brought about these significant changes not by amending Rule 23(a), but by interpreting it.[37] As Professor Arthur Miller explains, the heightened evidentiary demands and increased scrutiny of class actions effectively “deny class certification well short of any determination of a case’s merits,” imposing “significant additional cost and delay” and inhibiting the filing of meritorious cases, leaving “public policies underenforced” and “citizens uncompensated.”[38]

C.   Cutting Back on Rule 23(b)(2)

Wal-Mart also significantly limited the utility of Rule 23(b)(2) injunctive class actions by limiting monetary relief to that which is “incidental” to the requested injunctive or declaratory relief.

The plaintiffs in Wal-Mart sought certification under Rule 23(b)(2), which conditions certification upon the defendant having “acted or refused to act on grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole.”[39] The Supreme Court ruled unanimously that only monetary relief that is “incidental” to the equitable relief sought by the class may be recovered in a Rule 23(b)(2) class action.[40] To be available under Rule 23(b)(3), the money damages had to “flow directly from liability to the class as a whole on the claims forming the basis of the injunctive or declaratory relief.” [41]

The Court not only held that the monetary relief sought by the plaintiffs in Wal-Mart did not meet that requirement, but also that the case would not have qualified for class treatment under Rule 23(b)(2) even if the plaintiffs did not seek damages.[42] The Court reasoned that the Rule “does not authorize class certification when each individual class member would be entitled to a different injunction or declaratory judgment against the defendant.”[43] In other words, a class action could not be used to vindicate unique individual equitable claims. Because of the autonomy enjoyed by each supervisor at each Wal-Mart store, the alleged harms suffered by each class member were individualized and not suffered by the class as a whole.[44] Thus, the Court concluded that each class member would be entitled to “a different injunction or declaratory relief”—as well as to “an individualized award of monetary damages”—and thus Rule 23(b)(2) could not be satisfied.[45]

The insurmountable hurdle for the Court in Wal-Mart was that class members were harmed in different ways at different times by the alleged acts of different supervisors acting under different standards. Thus, Wal-Mart does not stand for the broad proposition that a class can never use representative evidence to prove monetary recovery for class members. Rather, it establishes that the relief sought under Rule 23(b)(2) must be the same for each class member.

Indeed, the Court upheld a class-wide demonstration of damages in Tyson Foods, Inc. v. Bouaphakeo.[46] There, employees of a meat-packing plant sued under the Fair Labor Standards Act, claiming that their employer wrongfully denied them compensation for time spent donning and doffing protective garments they were required to wear while working.[47] The suit required the class members to show that they had worked more than forty hours per week, including time spent putting on and taking off the protective gear.[48] Because the defendant had failed to keep records of employee “donning and doffing” time, the class resorted to presenting representative evidence in the form of expert reports and testimony. One expert recorded observations of employees from company videotapes, then another expert determined average times spent by various groups of employees and used that information calculate the appropriate amount of overtime.[49]

The Court upheld this use of representative evidence, reasoning that because it “could have been sufficient to sustain a jury finding as to hours worked” in each employee’s individual action, it was sufficient to support class certification.[50] The Court emphasized that the employees in Wal-Mart were not similarly situated; their circumstances were unique, such that none could have relied upon evidence adduced by another.[51] The Tyson Foods class, on the other hand, consisted of workers doing similar jobs at the same plant and being “paid under the same policy.”[52] In making this distinction between the Wal-Mart class and the Tyson Foods class, the Court clarified that “a common question is one where the same evidence will suffice for each member to make a prima facie showing or the issue is susceptible to generalized, class-wide proof.”[53]

D.   Heightened Scrutiny of Predominance

The Supreme Court’s decision in Comcast Corp. v. Behrend,[54] marked another pivotal moment in the retrenchment of Rule 23. In a 5-4 opinion authored by Justice Scalia, the Court reversed class certification in a consumer antitrust case because the plaintiffs failed to establish that their damages were “susceptible of measurement across the entire class” in a manner consistent with their theory of liability.[55] Although the plaintiffs’ expert had proposed four theories of antitrust impact, the district court accepted only one—market concentration—and certified the class based on a damages model that had not been tailored to that theory. The Supreme Court held that this was insufficient under Rule 23(b)(3), which requires that “questions of law or fact common to class members predominate over any questions affecting only individual members.”[56]

Comcast thus reinforced the evidentiary demands outlined in Wal-Mart, insisting not only on “rigorous analysis” at certification but also on increased scrutiny of expert methodologies. Emphasizing that certification is inappropriate if “individual damage calculations will inevitably overwhelm questions common to the class,” the Court held that certification was improper because the plaintiffs had failed to establish that their damages could be measured on a class-wide basis.[57]

In dissent, Justices Ginsburg and Breyer cautioned that the majority’s ruling should be construed narrowly, asserting that it “breaks no new ground” and warning against its application as a broad constraint on Rule 23(b)(3) jurisprudence.[58] Nonetheless, the ruling signaled a doctrinal tightening of Rule 23(b)(3)’s predominance requirement that has echoed through the lower courts.

In the wake of Comcast, several circuits adopted a more demanding approach to predominance. The D.C. Circuit, for example, vacated certification in In re Rail Freight Fuel Surcharge Antitrust Litigation,[59] holding that because the plaintiffs’ expert model produced false positives, it could not reliably establish injury or damages on a class-wide basis.[60] The court emphasized that Comcast requires courts to assess not merely whether plaintiffs offer a class-wide model, but whether the model works—that is, whether it can reliably separate injured from uninjured class members.[61] Likewise, in In re Lamictal Direct Purchaser Antitrust Litigation,[62] the Third Circuit vacated class certification and held that the district court erred by accepting the plaintiffs’ expert testimony on damages “without conducting a rigorous analysis of the competing expert reports and resolving the competing factual disputes on which the reports rely.”[63]

These decisions, read together, reflect a broader doctrinal trend: courts have found that Rule 23(b)(3) predominance now requires not only common questions of law or fact, but common answers supported by admissible, coherent, and theory-specific economic modeling. As Professor Klonoff has noted, this heightened scrutiny of predominance represents a significant departure from earlier jurisprudence, where individualized damages did not preclude certification as long as liability was common to the class.[64] In practical terms, Comcast and its progeny have helped transform class certification from a procedural threshold to a de facto hearing on the merits, requiring plaintiffs to present not merely a plausible theory of harm, but a fully-operational method for quantifying and distributing damages at scale in the event certification is granted.

IV.    Defendants’ Ability to Largely Eliminate Class Actions Through Arbitration Clauses

Even while courts interpreted Rule 23’s certification standards as increasingly difficult for plaintiffs, corporate defendants have increasingly turned to a more categorical tool: the arbitration clause. Starting in the late 1990s, businesses began regularly inserting mandatory arbitration provisions in contracts, often coupled with class action waivers designed to foreclose collective litigation altogether. An empirical study found that by 2010, 75 percent of consumer contracts contained such clauses.[65]

These clauses’ enforceability is rooted in the Federal Arbitration Act (the “FAA”), which embodies a strong federal policy favoring arbitration. Section 2 of the FAA provides that arbitration agreements “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.”[66] For a time, courts had held that state unconscionability doctrines could render class waivers unenforceable. That line of reasoning came to a decisive end with the Supreme Court’s ruling in AT&T Mobility LLC v. Concepcion.[67]

Concepcion involved a $30.22 claim over sales tax that AT&T charged a customer for a phone that was supposed to be free. The plaintiffs sought class-wide relief, but AT&T invoked an arbitration clause that expressly barred both class litigation and class arbitration. Applying California’s Discover Bank rule, the district court and the Ninth Circuit both found the arbitration clause unconscionable under state law.[68] The Supreme Court reversed in a 5-4 decision authored by Justice Scalia, holding that California’s rule was preempted by the FAA’s savings clause.[69]

In dissent, Justice Breyer underscored the practical consequences of the majority’s ruling. Without class procedures, he questioned, “[w]hat rational lawyer would have signed on to represent the Concepcions in litigation for the possibility of fees stemming from a $30.22 claim?”[70]

The Court extended Concepcion in American Express Co. v. Italian Colors Restaurant,[71] a case that considered whether class action waivers could be invalidated when they effectively barred the vindication of federal rights. There, a group of merchants alleged that American Express violated the Sherman Act, but their arbitration agreement contained a broad waiver of any form of collective action. The Second Circuit declined to enforce the waiver, finding that the plaintiffs had shown the clause would “effectively preclude” their ability to bring federal antitrust claims.[72]

The Supreme Court reversed. Writing again for a 5-4 majority, Justice Scalia rejected any case-by-case inquiry into whether a class waiver might prevent the effective vindication of statutory rights. “[T]he antitrust laws,” the Court concluded, “do not guarantee an affordable procedural path to the vindication of every claim.”[73] Italian Colors thus cemented the principle that the FAA’s mandate to enforce arbitration clauses can override not only state law but also any federal policy interest in facilitating private enforcement through aggregate litigation or arbitration.

The combined effect of Concepcion and Italian Colors has been, in the words of Professor Klonoff, “to deal a crippling blow to the adjudication of many kinds of small-claims cases.”[74] For defendants, a well-constructed arbitration clause now serves as “get out of jail free” card.

V.    Effects and Consequences of Recent Supreme Court Decisions

Judicial interpretation of the requirements of Rule 23(a) and (b) has transformed class action practice over the last few decades, as courts have become increasingly skeptical in reviewing whether a particular case satisfies those requirements. This skepticism has ushered in a set of “judicially established class action stop signs”[75] that require class plaintiffs to make a substantial evidentiary showing at the certification stage, often amounting to early merits litigation.

This shift reflects a broader move toward front-loading litigation. As Professor Freer notes, “[t]he certification process has become more expensive and protracted, consistent with a larger procedural arc in favor of ‘front-loading’ litigation: requiring litigants to expend greater effort and money at earlier stages of a case.”[76] Plaintiffs must now marshal expert testimony, withstand Daubert challenges, and often litigate elements of their substantive claims—not to prevail at trial, but merely to secure access to class adjudication that could, if successful, be followed by a trial. The result is a procedural gauntlet that imposes high upfront costs and pre-certification delays.

The consequences are particularly acute in complex or marginal cases. The heightened burden of proof and likely need for costly expert testimony act as a powerful deterrent to filing class actions. Cases involving diffuse injuries, individualized damages, or novel legal theories may simply never be brought. Even in matters that meet every standard for certification, narrower class definitions and more tailored liability theories can reduce the scope of relief and weaken systemic deterrence. At the same time, the cost and uncertainty of certification battles increase the pressure on plaintiffs to settle. Defendants can exploit the risk of decertification or interlocutory appeal under Rule 23(f) as leverage to drive down pre-certification settlement amounts and delay resolution. The upshot is that Rule 23 has, in practice, become less a gateway to collective justice and more a contested battleground that systematically favors well-resourced defendants over plaintiffs who are likely to be financially constrained.

These developments, taken together, threaten to diminish not only the deterrent function of the class action device, but also the very aspects of simplicity, efficiency, and justice that were once at its heart. As fewer class cases reach certification, it becomes more likely that systemic misconduct will go unaddressed. When viewed in conjunction with the rise of enforceable class action waivers in arbitration clauses, the Supreme Court’s recent evolution of Rule 23 doctrine reflects a broader retreat away from aggregate litigation as a meaningful check on mass harm.

VI.  Adaptive Strategies for Plaintiffs

Faced with escalating burdens at the certification stage, putative class plaintiffs and their counsel have responded with a range of adaptive strategies designed to preserve the viability of class actions in a more hostile procedural environment. These tactics reflect both reactive adjustments to evolving doctrine and proactive efforts to exploit remaining doctrinal openings.

One prominent strategy is geographic: in the wake of CAFA, plaintiffs have increasingly steered cases into federal circuits perceived as more receptive to certification. This tactic is supported by empirical research from the Federal Judicial Center (the “FJC”). As Howard Erichson explains, “the district courts within the Ninth Circuit saw by far the biggest post-CAFA increase [in diversity class action filings], growing nearly sixfold from 2004.”[77] This growth, he notes, corresponds with “lawyers’ perception of the Ninth Circuit as relatively liberal on class certification.”[78] Similar surges occurred in the Third, Second, and Eleventh Circuits, while growth in circuits such as the Fourth, Sixth, Seventh, Eighth, and Tenth was markedly more modest.[79]

Beyond forum selection, plaintiffs and their counsel are increasingly prioritizing early, thorough discovery. Because Rule 23 now effectively requires evidentiary showings that go to the heart of the merits—particularly with respect to predominance—plaintiffs often seek access to full discovery before certification. In In re Rail Freight Fuel Surcharge Antitrust Litigation,[80] the district court rejected defendants’ proposal for bifurcated discovery that would have limited initial disclosures to “class” issues alone.[81] As the court explained, “[t]o limit plaintiffs to what defendants will give them is to, in effect, begin and end discovery with defendants’ voluntary disclosures.”[82] Such a restriction would effectively supplant the American adversarial model with “a unique form of discovery for class actions” not found in the Federal Rules.[83] Other courts have similarly endorsed robust early discovery to give plaintiffs a chance to substantiate class-wide allegations.[84]

Finally, plaintiffs and their counsel have sought to use heightened certification standards to their benefit in settlement negotiations. Because defendants understand the uphill battle that certification often entails, a court’s decision to certify a class is an important signal that can, by itself, exert greater pressure on a defendant to settle—and justify larger settlement demands.

Together, these adaptive strategies reveal plaintiffs and the plaintiffs’ bar working to adapt to a changing environment within increasingly rigid confines. They also, however, underscore the risk of inefficiencies and inequities that the current trend of doctrinal front-loading in class action litigation seems to have spawned: when the rules raise the price of entry, only the best-resourced or most narrowly-tailored cases survive.