The Curious Complications with Back-End Opt-Out Rights


Published in 49 Wm & Mary L. Rev. 373 (2007).


Class action litigation seeks to mediate pressing conflicts between individual autonomy and collective justice; federal supervision and local control; self-interested class counsel and the represented class. These conflicts are exacerbated when a federal court that approves a class action settlement later seeks to enjoin state court litigants from violating its terms. Yet the demand for such injunctions has increased in light of the advent of back-end opt-out rights. In recent years, class members have been afforded “back-end,” or delayed, opportunities to opt out of a class action once the terms of the settlement are disclosed. These back-end opt-out rights may afford only limited rights to sue outside the confines of the class action – for example, class members may be permitted to seek compensatory but not punitive damages. Does the federal court that approved the settlement have authority to enjoin back-end opt-out plaintiffs from seeking relief in state court that exceeds the limits built into the back-end opt-out right? Three sets of curious complications may arise if the federal court seeks to enter such an injunction. First, if diversity is lacking between the opt-out plaintiff and the defendant, and the plaintiff sues on only state-law claims, the federal court may lack subject matter jurisdiction to grant an injunction. It also may lack personal jurisdiction over an opt-out plaintiff who has no contacts with the state in which the federal court sits. Second, federalism complications are likely to crop up. Both the Anti-Injunction Act and the Younger abstention doctrine limit the authority of federal courts to issue injunctions against pending state court proceedings. Finally, equitable and practical considerations may counsel against micro-management of state court litigation by a federal judge. The objective in identifying these complications is not to question the wisdom of back-end opt-out rights, but rather to encourage their use by suggesting a variety of steps that courts and counsel can take to enforce the limits built into back-end opt-out rights without unnecessarily intruding upon the prerogatives of state court judges, exposing back-end opt-out plaintiffs to onerous litigation in for a with which they have no contact, or rendering their preserved rights meaningless. Among other recommendations, the article urges federal and state courts to collaborate in the enforcement of back-end opt-out rights.


Courts | Jurisdiction

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