For several decades, courts have awarded the representative plaintiffs in class actions an additional payment when their actions recover compensation for their class. The logic behind these “incentive” or “service” awards is straightforward. Class actions require a representative, and no one would agree to take on the additional work of the position without an added financial benefit.
Scholars have debated the merit of incentive awards, but the practice remained ubiquitous until 2020, when the U.S. Court of Appeals for the Eleventh Circuit became the first (and only) circuit to deem them unlawful in Johnson v. NPAS Solutions, LLC. Did the decision cause a decline in class action filings in the Eleventh Circuit, relative to other circuits?
A recent study by Brian Fitzpatrick and Colton Cronin of Vanderbilt Law finds, to the authors’ surprise, no compelling evidence of a decline.
“Apparently, class members may be willing to serve as representatives without the extra compensation, perhaps for selfless or principled reasons,” they write in their article “Do Representative Payments Matter? An Empirical Study,” published in the Journal of Empirical Legal Studies.
Using data from Lex Machina on nationwide class action filings from 2017-2024, the authors found no statistically significant reduction in non-securities filings in the Eleventh Circuit after the Johnson decision, relative to other circuits. (Securities filings are governed by a special statute and were excluded from the analysis.)
“Our results cannot help but raise doubt about the veracity of the instrumentalist argument for representative payments,” the authors conclude.
Fitzpatrick and Cronin explore a few potential explanations. Class representatives may be willing to serve in the role to right a wrong or help others, a theory confirmed anecdotally through conversations with class action attorneys. Lower courts in the Eleventh Circuit may not be following or distinguishing Johnson. For example, district judges have begun to hold that Johnson does not apply to diversity cases—but the authors’ analysis found no effect on filings even in non-diversity cases.
Whatever the reason, the study, as the authors put it, “may give courts and commentators additional reason to rethink the prevailing practices in federal court.”
Brian Fitzpatrick is the Milton R. Underwood Chair in Free Enterprise at Vanderbilt Law. Colton Cronin is a fifth-year student in the Law & Economics program at Vanderbilt Law.