A “Good Faith” Standard for Reviewing Class Certification?

Eran Taussig (SJD, UPenn) has posted an article comparing the Israeli and American class action rules, and arguing in favor of the Israeli “good faith” standard. The article is called “Broadening the Scope of Judicial Gatekeeping: Adopting the Good Faith Doctrine in Class Action Proceedings“:

This paper suggests that using the concept of ‘good faith’, as is usedin Israeli class action proceedings, could resolve some of theshortcomings in U.S. class action proceedings. There is a vastliterature about the abuse of the class action procedure in the UnitedStates. Among other problems, scholars lament the extensive filing ofmeritless class actions in order to extort unwarranted settlements andthe so-called “sweetheart settlements”, in which class counsel colludeswith the defendant to settle meritorious claims for far less than theyare worth, in exchange for fees in excess of those he would haveexpected had the parties proceeded to trial. Yet, there are nosatisfactory solutions to the abuse of this procedure. This paperaddresses this gap by describing and evaluating a solution thatoriginates outside the United States. Unlike Rule 23, the recentlyenacted Israeli Class Actions Law includes a good faith requirement asone of the prerequisites to certification. This requirement is used toscrutinize the motives of the representative plaintiff and the classcounsel. Israeli Courts will not certify class actions which have beeninstituted for collateral or illegitimate purposes such as extortion orharming a competitor. The paper suggests that the application of goodfaith in the U.S. could resolve some of the more significant flaws inthe American class action mechanism. In making this argument, the paperalso considers both the larger legal and socio-politicalcontexts–specifically the role that litigation plays in the Americanand Israeli societies.

ADL