To Skin a Cat: Qui Tam Actions as a State Legislative Response to Concepcion

Authors

Janet Cooper Alexander, Stanford Law School

Abstract

The Supreme Court's decision in Concepcion is widely regarded as heralding the demise of small-claims class actions whenever contracts of adhesion are involved in the transaction-which means for virtually all consumer and employment claims. Amending the Federal Arbitration Act to overturn Concepcion would be a relatively simple exercise in legislative drafting, but in the current political climate such efforts are unlikely to succeed. Thus far, proposed federal corrective legislation has failed to pass, and federal agency regulation of class waivers has been lacking. State legislatures might have the political ability to pass corrective legislation, but virtually all state limitations on class waivers in mandatory arbitration clauses are foreclosed by federal preemption under Concepcion. This Article proposes an alternative approach that could be taken at the state level: statutory qui tam actions to enforce civil penalties for violations of state consumer protection and employment laws. A qui tam action is a representative action brought on behalf of the state, to enforce the state's claim for civil penalties, rather than a class action to recover compensation for individual injuries. The penalties are owed to the state, with a share of the recovery payable to the plaintiff as an incentive to private enforcement. The action is for the public benefit, for the law enforcement purpose of ensuring compliance with state law, rather than for private benefit. Thus, the rationale 0f Concepcion simply does not apply to such actions. Indeed, allowing private parties to contract away the state legislature's chosen means of enforcing claims that belong to the state would seriously impair the state's ability to execute core governmental functions. It would be an intrusion into state sovereignty that should give pause to neo-federalists such as the majority in Concepcion. California's Private Attorneys General Act (PA GA), which provides a mechanism for private enforcement of civil penalties for violation of the state labor code, is an example of how a state might use the qui tam model to hold defendants accountable for mass harms without being vulnerable to FAA preemption under Concepcion. After describing the operation of PAGA and how courts have interpreted it, I propose some simple adjustments that would increase the likelihood that courts would find Concepcion inapplicable to a PAGA-style qui tam statute. Qui tam actions are not a perfect substitute for class actions, because they can provide only limited compensation to victims. But they may partially fill the deterrence gap that Concepcion is widely expected to create.

Recommended Citation

Janet C. Alexander, To Skin a Cat: Qui Tam Actions as a State Legislative Response to Concepcion, 46 U. Mich. J. L. Reform 1203 (2013).
Available at: https://repository.law.umich.edu/mjlr/vol46/iss4/4