On Behalf of All Others Similarly Situated: Class Representation & Equitable Compensation

Authors

Alexander J. Noronha, University of Michigan Law School

Abstract

Class actions require class representation. In class actions, plaintiffs litigate not only on their own behalf but “on behalf of all others similarly situated.” For almost fifty years, federal courts have routinely exercised their inherent equitable authority to award modest compensation to deserving class representatives who help recover common funds benefiting the plaintiff class. These discretionary “incentive awards” are generally intended to compensate class representatives for shouldering certain costs and risks—which are not borne by absent class members—during the pendency of class litigation.

The ubiquity of permitting class action incentive awards ended in 2020. In an extraordinary ruling, the Eleventh Circuit held that incentive awards are per se unlawful under late nineteenth-century Supreme Court precedent. This holding has ignited a new controversy in the federal courts with far-reaching implications for the future of class actions.

Much of the existing legal scholarship on incentive awards analyzes policy rationales, quantitative trends, and legal standards involving the questions of “When?” and “How much?” to compensate class representatives. Only recently have scholars turned their attention to the more foundational question of whether federal courts have a sound basis to allocate incentive awards to class representatives under any circumstances. This Note weighs in on that debate by revisiting the Eleventh Circuit’s recent decision to categorically ban incentive awards.

More importantly, this Note looks to the future and confronts the reality that other federal circuit courts or the Supreme Court could eventually adopt the Eleventh Circuit’s position on incentive awards. Facing that unsettling prospect, this Note presents three proposals—one for policymakers and two for plaintiff-side class action practitioners—that could save the equitable tradition of compensating class representatives and reinforce the viability of the class action device itself.

Recommended Citation

Alexander J. Noronha, On Behalf of All Others Similarly Situated: Class Representation & Equitable Compensation, 122 Mich. L. Rev. 733 (2024).
Available at: https://repository.law.umich.edu/mlr/vol122/iss4/4